1951-06-20

Hon. Lionel Chevrier (Minister of Transport):: I wish to table a report showing
certain cases in which ships were exempted under the provisions of section 133A of the Canada Shipping Act, 1934, from the obligation of carrying certificated masters, mates and engineers.



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that I have received the following communication:
Ottawa, June 16, 1951
Sir:
I have the honour to inform you that the Honourable Robert Taschereau, a judge of the Supreme Court of Canada, acting as Deputy of His Excellency the Administrator, will proceed to the Senate chamber on Wednesday, the 20th June, at 5.45 p.m., for the purpose of giving the royal assent to certain bills.
I have the honour to be, sir.
Your obedient servant,
J. F. Delaute
Assistant Secretary to the Governor General



QUESTIONS


WHEAT BOARD


Mr. Diefenbaker:: 1.	How many prosecutions, by provinces, have been launched or commenced at the instance of the Canadian wheat board, for breach of regulations of the Canadian wheat board, in each of the years 1949, 1950, and 1951, to date?
2.	What was the amount of the penalty, and the nature of the breach in each case?


Mr. Mcllrailh:: 1.	1948-1949 Crop Year
Alberta
Charges laid:
One charge laid for delivery of grain in excess of quota.
Two charges laid for accepting delivery of grain in excess of quota.
One charge laid for discharging wheat from elevator.
Convictions:
One conviction for producer delivering grain in excess of quota. (Fine of $1 and costs.)
Two convictions for elevator agents accepting delivery of grain in excess of quota. (Fine of $10 and costs in each case.)
One conviction for elevator company having discharged grain from a licensed country elevator and storing it on the ground, the said grain being the property of the Canadian wheat board. (Fine of $100 and costs.)
Saskatchewan
Charges laid:
Five charges laid for delivery of grain in excess of quota.
Five charges laid for accepting delivery of grain in excess of quota.
Two charges laid for failure to enter deliveries in permit books.
Convictions:
Five convictions for producers delivering grain in excess of quota. (Fine of $1 and costs in four cases; $5 and costs in one case.)
Five convictions for elevator agents accepting delivery of grain in excess of quota. (Fine of $1 and costs in four cases and $2 and costs in one case.)
Three convictions for elevator agents failing to enter deliveries in permit books. (Fine of $2 and costs in one case and $5 and costs in two cases.)
Manitoba
Nil.
1949-1950 Crop Year Alberta
Charges laid:
Sixteen charges laid for delivery of grain at wrong delivery point.
Sixteen charges laid for taking part in illegal delivery.
Two charges laid for failure to make entries in permit books.
One charge laid for taking part in delivery of grain at unauthorized point.
Convictions:
Fifteen convictions for producers delivering grain at wrong delivery point. (Fine of $5 and costs in each case.)

Questions
Sixteen convictions for elevator agents taking part in illegal delivery. (Fine of $10 and costs in each case.)
Two convictions for elevator agent failing to make entries in permit books. (Fine of $10 and costs in each case.)
One charge dismissed for producer delivering grain at wrong delivery point.
One charge dismissed for elevator agent taking part in delivery of grain at unauthorized point.
Saskatchewan
Charges laid:
Fifty-eight charges laid for delivery of grain in excess of quota.
Fifty-eight charges laid for accepting delivery of grain in excess of quota.
Two charges laid for delivery of grain at wrong delivery point.	,
One charge laid for making false declaration.
Twenty charges laid for failure to enter deliveries in permit books.
Eight charges laid for delivery from lands not named in permit book.
Three charges laid for counselling and procuring for delivery of grain at delivery point other than listed on permit book.
One charge laid for purchasing grain at delivery point other than specified in permit book.
One charge laid for accepting grain at delivery point other than specified in permit book.
Convictions:
Fifty-eight convictions for producers delivering grain in excess of quota. (Fine of $1 and costs in 14 cases; $2 and costs in two cases; $2.50 and costs in two cases; $8 and costs in seven cases; $10 and costs in twenty-five cases; $12 and costs in one case; $15 and costs in three cases; $20 and costs in three cases and $25 and costs in one case.)
Fifty-eight convictions for elevator agents accepting delivery of grain in excess of quota. (Fine of $1 and costs in fourteen cases; $2 and costs in two, cases; $5 and costs in thirty-six oases and $7 and costs in six cases.)
Two convictions for producers delivering grain at wrong delivery point. (Fines of $2.50 and costs and $10 and costs.)
One conviction for producer making false declaration. (Fine of $1 and costs.)
Twenty convictions for elevator agents failing to enter deliveries in permit books. (Fine of $1 and costs in five cases; $2 and costs in two cases; $5 and costs in nine cases and $7 *and costs in four cases.)
I Mr. McIIraith.]
Eight convictions for producers delivering grain from lands not named in permit book. (Fine of $2.50 and costs in two cases; $5 and costs in one case, $10 and costs in one case; $25 and costs in three cases and $50 and costs in one case. Farmer served jail term rather than pay the $50 fine. One month jail term.)
Three convictions for superintendent counselling and procuring for delivery of grain at delivery point other than listed on permit book. (Fine of $25 and costs in each case.)
One conviction for elevator agent purchasing grain at delivery point other than specified in permit book. (Fine of $5 and costs.)
One conviction for elevator agent accepting grain at delivery point other than specified in permit book. (Fine of $5 and costs.)
Manitoba
Charges laid:
One charge laid for delivery of grain at delivery point other than specified in permit book.
Conviction:
One conviction for producer delivering grain at delivery point other than specified in permit book. (Fine of $25 find costs.)
1950-51 Crop Year Alberta
Charges laid:
One charge laid against elevator agent for false entry in permit book.
Convictions:
One conviction against elevator agent for false entry in permit book. (Fine of $25 and costs.)
Saskatchewan Charges laid:	[DOT]
Twenty-nine charges laid for delivery of grain in excess of quota.
Thirty-four charges laid for accepting delivery of grain in excess of quota.
Four charges laid for accepting grain at a delivery point other than specified in permit book.
One charge laid for entering delivery in wrong permit book.
One charge laid for delivery of wheat at wrong delivery point.
One charge laid for delivering wheat which was entered in another producer's permit book.
Convictions:
Twenty-nine convictions for producers delivering grain in excess of quota. (Fine of

$1 and costs in twenty cases; $3 and costs in four cases; $5 and costs in four cases; $50 and costs in one case.)
Thirty-four convictions for elevator agents accepting grain in excess of quota. (Fine of $1 and costs in twenty cases; $5 and costs in thirteen cases and $10 and costs in one case.)
Four convictions for agents accepting grain at a delivery point other than specified in permit book. (Fine of $1 and costs in one case and $5 and costs in three cases.)
One conviction for elevator agent entering delivery in wrong permit book. (Fine of $5 and costs.)
One conviction for producer delivering grain at wrong delivery point. (Fine of $5 and costs.)
One conviction for producer delivering grain which was entered in another producer's permit book. (Fine of $5 and costs.)
Manitoba
Charges laid: Twenty-eight charges laid for delivery of grain in excess of quota.
Thirty charges laid for accepting delivery of grain in excess of quota.
Thirteen charges laid for failure to enter deliveries in permit book.
Eleven charges laid for delivering grain to wrong delivery point.
Ten charges laid for accepting delivery of grain at wrong delivery point.
One charge laid for delivering grain on a permit, said grain produced on land other than named in said permit.
Convictions: Twenty-seven convictions for producers delivering grain in excess of quota. (Fine of $3 and costs in fifteen cases; $5 and costs in eleven cases and $15 and costs in one case.)
Eleven convictions for elevator agents accepting delivery of grain in excess of quota. (Fine of $5 and costs in nine cases; $15 and costs in one case and $50 and costs in one case.)
Ten convictions for producers delivering to wrong delivery point. (Fine of $3 and costs in seven cases; $5 and costs in one case and $15 and costs in two cases.)
Four convictions for elevator agents failing to enter deliveries of grain in producer's permit book. (Fine of $5 and costs in three cases and $50 and costs in one case.)
Two convictions for elevator agents accepting deliveries of grain at delivery point not named in permit book. (Fine of $5 and costs and $15 and costs.)
One stay of proceedings for producer delivering grain in excess of quota.
Questions
Nineteen stay of proceedings for elevator agents accepting over-deliveries.
Nine stay of proceedings for elevator agents failing to enter deliveries in producer's (permit book.
One stay of proceedings for producer delivering grain to delivery point not named in permit book.
Eight stay of proceedings for elevator agent accepting delivery of grain at delivery point not named in permit book.
One conviction for (producer delivering grain on a permit, said grain produced on land not named in said permit. (Fine of $15 and costs.)
2. See answers to No. 1.



QUESTIONS PASSED AS ORDERS FOR RETURNS


CENTRAL MORTGAGE AND HOUSING CORPORATION


Mr. Browne (St. John's West):: 1.	What contracts have been made in Newfoundland since April 1, 1949, by the Central Mortgage and Housing Corporation?
2.	What are the details of the contracts, including nature and amount of same, whether tenders were called for, and if contractors are to be compensated by fixed fee, percentage or otherwise?
PRINTING CONTRACTS LET BY KING'S PRINTER-[DOT] USE OF UNION LABEL


Mr. Knowles:: 1.	To what private firms were printing contracts let by the king's printer during each of the years 1948, 1949 and 1950?
2.	What was the amount of printing, by dollar value, let to each of the above firms during each of the above years?
3.	Which of the above printing firms are authorized to use the union label of an allied printing trades1 council?


Mr. Bradley:: Return tabled.



MOTIONS FOR PAPERS


Mr. Green (for Mr. Diefenbaker):: For a copy of all letters, telegrams, and other communications since January 1, 1949, and to date, in connection with the nine ships built for the Ming Sung Industrial Company Limited and/or its Canadian subsidiary, by the St. Lawrence Metal and Marine Works and Davie shipbuilding company, which have passed between the government of Canada and (1) the said Ming Sung Industrial Company Limited and/or its Canadian subsidiary or on behalf of either of said companies; (2) the Davie shipbuilding company, or any of its officers or other persons on its behalf.


Mr. Abbott:: The hon. member is not in, his seat, and I wonder if the hon. member for

Motions for Papers
Vancouver-Quadra would mind letting this stand. I wanted to have a word with the mover about it.


Mr. Speaker:: Stand.



MING SUNG INDUSTRIAL COMPANY-CORRESPONDENCE WITH GOVERNMENT OP HONG KONG

Howard Charles Green: For a copy of all letters, telegrams, and other communications which, since January 1, 1949, and date hereof, have passed between any department of the government of Canada and any official of the government of Hong Kong, relating to exemptions granted to the Ming Sung Industrial Company Limited, under both the Canadian and British shipping acts of the said company.


Mr. Lesage:: I would ask that this stand for the same reasons.


Howard Charles Green: I am moving it for the hon. member for Lake Centre.


Mr. Howe:: This will take a considerable time to answer. Some of the correspondence, of course, is in Hong Kong. If the matter could be permitted to stand until we can discuss it with the mover, I think time would be saved.


Mr. Drew:: This is a request for correspondence in regard to a specific subject. It will be noted that a short time ago it was possible to get a letter back from Hong Kong within a few days, demonstrating the facilities afforded now by air service. Certainly the correspondence here could be tabled. In any event, the only correspondence this government could table is correspondence under its own control. I believe that this could be proceeded with without the necessity for any delay.


Mr. St. Laurent:: The hon. member perhaps will recall that that correspondence is usually in the form of cipher telegrams, and could not be produced in the text because that would give clues that would be helpful in breaking down the cipher. Correspondence with the government of another country is not produced without the consent of that government, and that consent would have to be obtained. I do not think it is unreasonable to ask that this stand for twenty-four hours until we can see just what correspondence there is here, and what paraphrasing it might be necessary to do to avoid giving clues that might be of assistance ini breaking down the cipher.


George Alexander Drew: If it is a matter of twenty-four hours, that is reasonable. But some of these delays, as indicated by other questions on the order paper of a similar kind, take many weeks, and that was what I had in mind. Certainly I would concur in the suggestion that this matter be allowed1 to stand for twenty-four hours.

Since the question has been raised at this particular point, Mr. Speaker, perhaps it might be appropriate if on a question of privilege I refer to a report that has been tabled. As I understood the answer given last Friday night by the Minister of Transport (Mr. Chevrier), it was to the effect that their records showed that the masters of all the ships were Chinese. I find that it appears quite clearly that this is not the case, because the master of the Yen Men is shown by the report now tabled as P. Haniscb. I do not think that is a Chinese name.


Douglas Charles Abbott: How do you know?


George Alexander Drew: I suggest it sounds more like a Russian name than a Chinese name.


Louis Stephen St-Laurent: We are much obliged for the expert opinion.


Douglas Charles Abbott: There is no privilege in this.


Mr. Speaker:: Order. The next notice of motion-


George Alexander Drew: I am sorry, sir; I thought you were calling "order" because you were going to -raise some point. I believe there is a question of privilege here. I raised it not only as a question of privilege but as a matter of major public importance. The rules are quite clear with regard to the introduction of a discussion of this kind at this point in the proceedings.


Louis Stephen St-Laurent: I do not think the Speaker can stand for that.


Mr. Speaker:: I aim not so sure that the rules are so clear in regard to that, but I do think the leader of the opposition should be allowed to make a brief statement on the question of privilege.


George Alexander Drew: I was pointing out that in
addition to the question of privilege, there is the other matter. In view of the fact that we have had certain rules clarified during this session I would point out that nearly every day some minister of the crown, whose position is no higher that that of the leader of the opposition in regard to the introduction of subjects in the house-


Some hon. Members:: No, no.


George Alexander Drew: You will find that by practice the leader of the opposition is granted the same privilege in introducing subjects for discussion. I am not now referring to motions or other such matters having to do with the business of the house; but the practice is quite clear that where questions of importance are raised the leader of the opposition may appropriately reply to them. There is also the fact that on matters of

major public importance, I think the rules will indicate

I am not going to argue it now-that a subject may be introduced under the general acceptance of the proposition that under our system, with government on one side and opposition on the other, the leader of the opposition should be granted an opportunity of expressing his views, not merely by way of question but by way of statement. I make that observation now in the hope it may be given consideration at some other time.
I am bringing this subject forward in regard to the explanation that was given for permitting these ships to have this special exemption from the Canada Shipping Act.


Mr. Speaker:: Order. I believe I should
point out to the house that it is not in order for a member of the government or the leader of the opposition, on the order for motions, to raise questions which are likely to be controversial and to be debated at the time. The only matters that are allowed to be introduced are statements upon which the house will enter into a debate at a later date. There has been a practice that when important statements are made by a member of the government, the leader of the opposition and the leaders of the two other groups are allowed to make brief statements. I do not think the matter which the leader of the opposition is discussing at the present time is in order, because it is of necessity a controversial issue and will result in a debate. But I did say, and I am standing by my former ruling, that I feel I should allow the leader of the opposition to make a brief statement at this time as a question of privilege.


George Alexander Drew: I did indicate that I was raising it, Mr. Speaker, because I thought it was proper following the other matter. I should be happy to defer it until the orders of the day are called, but with your permission I will simply refer to it in the hope that some further explanation may be obtained as to the reason for the relaxation of this important regulation concerning those who may be masters, mates or engineers on ships under Canadian registry. It is stated that no British subjects with proper certificates of competency were available for employment. I would hope that later today the Minister of Transport will indicate to this house what evidence he has that there were no Canadians or British subjects with proper certificates of competency to handle these ships before this unusual exemption was given.
80709-276!
Motions for Papers


Lionel Chevrier: I believe I indicated the
reason for that in the earlier debate. I stated that information was received from Hong Kong to the effect that no British officers, engineers or mates were available for service on these ships; that was the reason for recommending - the exemption under section 133A.
Motion stands.



MING SUNG INDUSTRIAL COMPANY


Mr. Fulton:: For a copy of the mortgage between. George T, Davie and. Sons, Limited, and the government, on the Davie yard, referred to by the Minister of Trade and1 Commerce as reported in Hansard for April 7, 1949, at page 2430.




Howard Charles Green: For a copy of the directive of the cabinet council, March or April, 1950, which authorized the exemption of the Ming Sung Company, in respect of five ships, from the provisions of the Canada Shipping Act.


Louis Stephen St-Laurent: The government cannot consent to this motion, for many reasons. One results from the express terms of the oath of office of the members of the privy council. It reads in part as follows:
You do solemnly promise and swear that you will serve His Majesty truly and faithfully in the place of his council in this His Majesty's Dominion of Canada; you will keep close and secret all such matters as shall be treated, debated and resolved on in privy council, without publishing or disclosing the same or any part thereof, by word, writing, or any otherwise to any person out of the same council, but to such only as be of the council . . .
That is a part of the oath of office. Now, this motion calls for a copy of a directive of the cabinet council of March or April, 1950. The Minister of Transport stated in debate the other night that there had been an oral directive. Whether or not it is proper to call it a directive is a matter which might be discussed. What happens is that when a minister of the crown has, by statute, the power to do a certain thing, and it is a mere matter of routine he does not necessarily discuss it with his colleagues. But because his conduct involves the responsibility of all the members of the government, if it is a matter about which he is in any doubt or about which he feels there may be some embarrassment, it is usual for him to discuss it with his colleagues before making his decision. The result of that discussion may be called a directive, or it may be called an opinion. It is an expression of the views of his colleagues upon the manner in which he might exercise the powers that

Motions for Papers
are given to him by statute. Prior to 1940 no -memoranda were kept of such discussions or *decisions in council. During the war, in 1940, it became the practice to keep memoranda of the discussions in the war committee of the cabinet; and in 1944 or 1945 the practice was started of keeping memoranda of these discussions which took place in cabinet. But these memoranda cannot be published.
When this question was raised I suggested that I might get permission from the administrator not to table them-they certainly *could not be published in that way-but to show them confidentially to the leader of the opposition. On consideration, however, it was found that such a procedure would establish a precedent which might some day embarrass whomsoever occupies the office I now occupy, and that it would not be proper to establish precedents which would in any way depart from this constitutional tradition that the matters treated, debated and resolved on in privy council cannot be published to any who are not of the privy council.
Although I do not wish to establish any precedent that would impinge upon that traditional constitutional rule, I think that such information as can be given in confidence to any member of parliament who is desirous of obtaining it, .and can be given without violating the express terms of the privy councillor's oath, can be expected to be given-. But from the time of confederation up to 1944 there were no memoranda of what took place in these deliberations, and nothing in writing resulted except the recommendations that were put before the governor general and that received his assent.


George Alexander Drew: Mr. Speaker-


Mr. Speaker:: Before the leader of the opposition speaks, may I remind the house that, under standing order 51, these notices of motion for the production of papers are to be put forthwith without debate. I hope there will be no misunderstanding of the rules. I -cannot allow debate. On the other hand, I think I should allow the leader of the opposition to make some reply to what has been said-.


George Alexander Drew: Mr. Speaker, it was because the Prime Minister had carefully explained the reasons that I felt it was appropriate that some comment should be made, because these records establish a precedent in regard to matters of this kind. The Prime Minister has referred to a well-established and reasonable tradition which has been recognized, namely, that discussions in the -privy council are indeed privy only to the members of the council itself. In fact, the very word "privy" indicates the nature of those discussions.

On the other han-d, the Prime Minister refers to a change which took place in the procedure some years ago. It was, in fact, Mr. Lloyd George who for the first time permitted anyone outside of the actual membership in the -council to be present; 'and he permitted a secretary of the -council to keep the memoranda to which the Prime Minister has referred. There has always been the recognized principle that, until many years afterwards, and the government itself decided that the reasons for secrecy had disappeared, those memoranda would not -be disclosed. I point out, however, that there is a distinction to be drawn between disclosure of the discussions which take place in the meetings of the council, and the result of those discussions-. I submit that the oath of office to which the Prime Minister has referred is one that applies strictly to the discussions in the meetings of the council, but not to the result of those discussions, upon which some subsequent action may be taken.
In this -case we are dealing with a directive which produces- a positive result outside of the privy council. It produces a result -precisely the same as that produced in other cases by order in council. Most certainly the rules of secrecy referred to by the Prime Minister do not apply to orders in council. That is one of the most clearly established rules that this house has insisted upon recognizing. An order in council is the result of secret discussions which must not be disclosed, but the order in -council becomes a functional interpretation of those secret discussions, which then produces action in accordance with those discussions.
This directive under a particular section of the Canada Shipping Act is in precisely the same category and is, I submit, under no greater measure of protection as to secrecy than is an order in council itself. In fact I submit it would produce a highly improper situation if simply by the device of not having a written directive and relying on an oral directive, we were then to be told that we could not know what the considerations were which produced such an- extraordinary result as that which followed in this particular case. Here we have a situation where most important provisions of the C-anada Shipping Act were waived so that ships could be operated, contrary to those provisions, in distant waters. If this principle is to apply to a directive of that kind, then the terms of secrecy might be extended to all the acts of the government made as a result of discussions in cabinet council, and the house would be left in ignorance with regard to some of the most important things that the government might do.

I therefore suggest that the Prime Minister should reconsider the decision he has made. With regret I wish also to indicate in advance that I would certainly feel that we should vote against any decision which would indicate acceptance of that point of view.


Louis Stephen St-Laurent: I wish to make only a brief reply. The leader of the opposition says -and he is quite right-that orders in council are not covered by the oath of office. They are published, and they are regularly tabled. The practice has now been established of producing every month a summary of the orders in council passed during the previous month.
In connection with these other matters, may I say that the effective act is the act of the minister. When he consults his colleagues beforehand he does so for courtesy reasons, because of the fact that his act will involve the responsibilities of his colleagues; but the official act is the act which he performs as minister, and that act was the exemption which he granted.
The government must insist on its obligation to the crown to maintain secret the decisions made, the opinions expressed and the debates which take place in council, otherwise than through the production of orders in council or the production of the official acts of the individual ministers under the statutory powers they are exercising.



CONSUMER CREDIT


[Stage Direction]
On the orders of the day:
Mr. D. F. Brown (Essex West):: Mr. Speaker, I should like to ask a question of the Minister of Defence Production or the Minister of Finance. Would either of those ministers inform the house as to the results of the imposition of credit restrictions in the automobile industry, and whether any further

Inquiries of the Ministry action is contemplated in the immediate future?


Douglas Charles Abbott: Mr. Speaker, I do not know that I can answer my hon. friend by telling him what the effect of the consumer credit restrictions has been on the automobile industry. These restrictions form a part of the government's anti-inflation program. My own view, for what it is worth, is that what appears to be a falling off in sales in the automobile industry has been due rather to production and purchasing in anticipation of tax increases, or something of the kind, and that for the time being the market is saturated; but that is a matter of personal opinion. There is certainly no intention to make any immediate change in consumer credit restrictions.


Mr. Bryce:: I should like to ask a supplementary question to that asked by the hon. member for Essex West. Will sufficient defence contracts be supplied to the automobile firms to keep them fully employed?


Clarence Decatur Howe: The employment situation in the automobile industry is being obscured by the strike at the Canadian Acme Screw and Gear company. Acme is a principal supplier of parts to the automobile industry, and until the flow of parts is restored, the unemployment situation will not be clear so far as the government is concerned. However, we will endeavour to make defence work available to the automobile industry, as we have to all industry, and we are hopeful that some relief may come through that source.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. G. R. Pearkes (Nanaimo):: Mr. Speaker, would the Minister of Labour make a statement about the threatened strike in the west coast shipping industry? The fruit growers on Vancouver island depend almost entirely upon shipments by boat and barge.


Hon. Milion F. Gregg (Minister of Labour):: Our conciliation officers in British Columbia are in close touch with the situation. I shall obtain an up-to-date report and inform the house tomorrow.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Robert Fair (Battle River):: Mr. Speaker, I should like to ask a question of the Minister


of National Defence, based upon a report appearing in this morning's Citizen to the effect-


Mr. Speaker:: Order. The hon. member should put his question without quoting from the newspaper.


Robert Fair: Will the Minister of National Defence make a statement as to the disturbance at Wainwright, Alberta, last night, in which some of the recent arrivals at this military camp were involved, and as a result of which the town hall and some of its contents were damaged?


Hon. Brooke Claxton (Minisier of Nalional Defence):: Mr. Speaker, I have already
received a report on the incident. A disturbance occurred when approximately forty soldiers interfered with members of the Canadian provost corps at Wainwright in connection with the detention of one man. This disturbance was speedily brought under control. Some damage was caused. Personnel concerned are being kept in barracks, and other steps are being taken.



HEALTH INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Charles Henry (Rosedale):: I should like to ask a question of the Prime Minister. Has the government given or will it give consideration to government participation in recent proposals of the Canadian Medical Association for national health insurance in Canada?


Louis Stephen St-Laurent: The hon. member sent me notice of his intention to ask a question, along with some interesting clippings from newspapers concerning the proposals referred to.
The government, as such, has not yet given consideration to these recent proposals, but I know from conversation with them that several members of the government, as Canadian citizens, myself included, have noted with great interest the reports of these proposals, and have welcomed this further evidence of the concern of the medical profession in Canada to increase the efficiency and scope of their assistance to their fellow-citizens in their traditional role of good Samaritans. Their profession, like the other professions, is organized and operates under provincial legislation and, under that legislation, their associations enjoy a large measure of professional autonomy. I think that circumstance is all to the good, and if, in the exercise of that professional autonomy, they

:an arrange to provide all Canadians with the medical care any of them may require, Erom time to time, on a prepaid basis, I am sure most of us will feel that also is all to the good. I have no doubt that all levels of government will be most anxious to see them succeed in that undertaking, and to consider with them what part those governments should take in helping to make the plan succeed and extend to the whole population.


Mr. Knowles:: Supplementary to the question asked by the hon. member for Rosedale, may I ask the Prime Minister whether the government will consider setting up, either in the fall session or in the session of 1952, a special committee of parliament to go into this question of health insurance?


Louis Stephen St-Laurent: That is something with which we shall have to deal a little later than this morning. I have said that I am sure that all levels of government-and that includes this government as well as others- will be most anxious to do everything they can to make it possible for the medical profession to carry out this undertaking under their autonomous powers. I think that it would be a most happy solution if the medical profession would assume the administration of, and the responsibility for, a scheme that would provide prepaid medical attendance to any Canadian who needed it.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. A. Earl Calherwood (Haldimand):: May
I ask the Minister of Resources and Development if the government has given consideration recently to bringing into effect part IV of the National Housing Act authorizing payments for home improvements?


Hon. Robert H. Winters (Minister of Resources and Development):: This matter
has received consideration on many occasions, but the government does not believe that the general implementation of the home improvement section of the act would be prudent at this time.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
George Alexander Drew: Before the orders of the day
are called I wish to direct a question to the Secretary of State. Yesterday, in his absence, the Prime Minister replied to a question I asked. I would point out to the Secretary of State that on June 14 he
Inquiries of the Ministry indicated that he would make inquiries and endeavour to expedite the bringing down of a return which was ordered on Monday, May 21, in response to a question asked by the hon. member for Three Rivers (Mr. Balcer). Can the Secretary of State indicate when that return will be available?


Frederick Gordon Bradley: Could the hon.. member give me some indication as to the subject matter?


Louis Stephen St-Laurent: I am sorry I overlooked bringing
this matter to the attention of the Secretary of State. However, I have made inquiries and I find that this return requires the getting of information from the board of grain commissioners. We have not received that information, and that is why the return has been delayed. If the hon. gentleman, speaking for the hon. member for Three Rivers, wishes to have the return filed without the information from the board of grain commissioners, that can be done at once.


George Alexander Drew: I welcome the Prime Minister's statement, and would ask that the information available be tabled at once. The information to be obtained from the board of grain commissioners can be tabled when it is received.


Louis Stephen St-Laurent: On that understanding
I shall ask that a partial return be prepared and tabled at once, and the other information will be tabled as soon as it is received.



NATIONAL HOUSING ACT


Robert Henry Winters: the third reading of Bill No. 381, to amend the National Housing Act, 1944.


Mr. Donald M. Fleming (Eglinton):: Mr. Speaker, there is just one comment that I wish to make by way of clarification.
I think it is quite evident, in view of the present position of the market, that if loans are to be obtained to assist in house construction under part I of the National Housing Act there will have to be some increase in the prevailing rate. As the act now stands I do not think there is any alternative. But that is no justification for the type of amendments to the act that are contained in this bill.
It has been a feature of the act from its first enactment in 1944 that the rate of interest, which is a most important factor in the whole housing plan, should be established and fixed in the legislation. Parliament is meeting now so frequently and constantly

National Housing Act
that it would not be difficult to have parliament deal with any changes needed from time to time in so important a matter as the interest rate. There is then no justification for giving to the governor in council this very broad power of fixing the rates prevailing under the various parts and sections of the National Housing Act.
It means that if this bill is adopted and that power given to the governor in council, parliament will not be consulted with reference to any future changes. Parliament will have less and less voice and less and less control in the direction of housing policy and the carrying out of the intent of parliament as reflected in the legislation adopted here.
I indicated yesterday what I thought was a proper perspective of the changes in rate, and that the increase of one-half of one per cent in relation to the whole housing problem would not be nearly as serious a matter as other retrograde steps the government has taken over the past year and a half. I do wish to make it clear that if we are to have loans available under the present scheme, it is obvious, considering the competitive conditions existing today in the mortgage market, that there must be this adjustment of one-half of one per cent. Nevertheless, that is no justification for the type of amendments contained in the bill now being submitted for third reading.


Mr. J. H. Blackmore (Lethbridge):: 
Douglas Charles Abbott: 1 believe the hon. member is completely out of order on this bill, and that is why I am afraid I have not been paying as close attention to him as I ordinarily would.


John Horne Blackmore: I doubt very much if I am out of order, for the simple reason that I moved the motion at the beginning and I am now discussing that motion. I am quite in order.


Mr. Speaker:: I shall have to consider whether the amendment is in order. It did occur to me that the hon. member was discussing general financial questions rather than the principle of this bill. I suggest to him that he complete his remarks as soon as possible.


John Horne Blackmore: Thank you, Mr. Speaker, and I shall endeavour to do just that. But you realize, sir, that it is one of the most frustrating things in the world for a member of parliament to come into this house year after year after year, representing a nation in which nature abounds with resources, and find the government sitting here twiddling its thumbs and failing to solve the problems which obviously it can solve physically, and pretending that the reason why it cannot solve the problems has to do with finance. If there is anything that could be more appropriate than discussion of finance in connection with the problem of housing, I must say that on the spur of the moment I cannot think of it. However, I will close this discussion promptly.
A valuable comment upon this whole Bradbury experiment, which I believe hon. members who are following me-and a number are

will desire to hear about, is to be found in another book by the same Dr. William A. Shaw, entitled "The Theory and Principles of Central Banking," copyrighted in 1930, after this great student of money had had time to give four years of further study to the Whole Bradbury situation.

Since I have referred to Dr. Shaw, I think it would be well for me to give the house some idea just how big a man Dr. Shaw is. In the first place, he is a doctor of letters; he is editor of the calendar of treasury-records at His Majesty's public records office; he is the author of "The History of Currency," "English Monetary Writers," '.'Currency, Credit, and the Exchanges During the Great War," "The Coming Reaction:	by Legislator," and so on. I
believe those qualifications give everyone justification for listening to his words with at least a moderate amount of attention. May I read a comment in this 1930 volume on the whole Bradbury question; it will be found at page 50:
It was only by accident during the great war that Great Britain stumbled upon the true principles of paper money issues. In the first financial shock caused by the outbreak of war the British treasury offered to the banks the help of an emergency loan currency for which the banks should pay interest. They unanimously declined to avail themselves of such form of relief, and thereupon the treasury offered to sell them currency notes at full face price without limit, and at the same time opened a currency note redemption fund for the purpose of retiring the issue as soon as the need for it was over. To the treasury's surprise the currency note quickly struck root, and proved itself completely acceptable, and gradually the treasury realized that the whole circulation of the country could be changed over to paper and the gold withdrawn. The change-over was accomplished with astonishing ease and speed by 1916. By the restrictions which were later placed on the movement of gold this currency note circulation became virtually inconvertible, though it was not declared so by law until 1925.
To this currency note circulation there was at first no limit fixed. It could fall or rise unhampered, according to the community's demand or need for it, and in the remaining years of the war and of the armistice period it bore the strain of increased prices and enormously increased production without friction or effort. For the first time in history the world had a sample of a truly automatic currency, issued only by the state, sold only at full face value, supplied or retired in complete accordance and response to the community's unfettered demand or need.
After ten years of illuminating experience this perfect, uncontrolled, and uncontrollable automatic currency system was thrown over, the automatic principle was surrendered, and our currency, although declared by law to be inconvertible paper, was placed, or was supposed to be placed, under the control of the Bank of England, and became once again sensitive, or was supposed to be made sensitive, to the vagaries of a fluctuating gold cover fund. Why was this retrograde step taken, and why did England thus throw over the pure theory of currency issue, which she had accidentally discovered and so wonderfully exemplified to the world?
The answer is threefold.
(1) The financial mind of London, both in the treasury and in the city, never assimilated the currency note concept, nor ever grasped the pure theory of currency issue which it exemplified. To this day the assertion is still made that the rise of prices which occurred during the war and armistice period was due to the currency note as an
National Housing Act
inflationary agent; whereas, in fact, the direct opposite was the case. The rise in prices preceded and caused the increase of the currency, and exactly the same increase of prices occurred in the United States, which was throughout on the freely acting gold standard, as in the United Kingdom under the currency note. It was only on the continent of Europe and in countries where the currency system was neither the free gold system of the United States of America, nor the self-regulating paper system of Great Britain, that price movements occurred of so abnormal a nature as to be attributable to currency inflation.
I am not going to read the remainder of the passage now.


Mr. Speaker:: Order.


John Horne Blackmore: But on page 54-


Mr. Speaker:: Order. I have allowed the hon. member to read a long extract from the book written by this well-known author. May I suggest to him now that he conclude his remarks.


John Horne Blackmore: Yes, I shall be glad to
conclude my remarks.
It may be said that this proposal that I have made would cause inflation. This question has been raised several times. I wish to point out that the supply position in this nation, as I set it forth on June 4 of this year, is good. May I cite as further evidence of that fact a statement which was put on the record by the Minister of Trade and Commerce (Mr. Howe) as reported at page 4078 of Hansard, the second paragraph of column one, where he says:	"There is
another matter-." I am not sure that I would be in order in reading that passage.


Mr. Speaker:: I doubt if the hon. member
would be in order in reading it at this time.


John Horne Blackmore: I will go on to say what
he showed. He conveyed the ideas: first, that civilian producers have exceptionally heavy stocks in Canada; second, that these civilian producers are likely to run into consumer resistance; and third, that we can have a flourishing civilian economy. How one can reconcile the danger of inflation from sufficient expansion of currency to build houses for this nation with that statement of the supply position in Canada, I think it is impossible to see. Consequently, Mr. Speaker, I would contend-and I believe on sound grounds-that the proposal that I have made would not cause inflation. I therefore feel that we are justified in supporting the amendment I have made to the motion for third reading of Bill No. 381.


Mr. Speaker:: An amendment has been moved by the hon. member for Lethbridge (Mr. Blackmore). Is there a seconder to his motion? If not, the motion will have to be dropped.

National Housing Act


Mr. Low:: I will second it.


Mr. Speaker:: The hon. member for Peace River (Mr. Low) seconds the motion, which is as follows:
That Bill No. 381 be not now read a third time, but that it be referred back to the committee of the whole, with instructions that they have power so to modify the bill that:
1.	The building of houses for Canadians shall depend upon the need of Canadians for houses, and their desire and willingness to build houses, limited only by the availability of Canadian resources, material and human, requisite for building houses;
2.	The availability of financial assistance for building houses shall be governed, not by the willingness or unwillingness of mortgage companies or other lending agencies to lend upon certain terms, but shall be governed by the credit of Canada, the result being that money shall be created and advanced by the Bank of Canada to prospective builders for as long a period as thirty years, if need be, and at interest rates not exceeding one per cent per annum, or at most, actual cost.
I doubt whether this amendment is in order on third reading of the bill. I would refer hon. members to Beauchesne's third edition, paragraph 710, part of which I shall read:
The question for the third reading is put immediately after the report from the committee of the whole. All amendments which may be moved on a second reading of a bill may be moved on the third reading with the restriction that they cannot deal with any matter which is not contained in the bill.
I shall also read paragraph 711:
When a motion is made "that the bill be now read a third time,'' the same kind of amendments are permissible as on the second reading, i.e., amendments postponing it for three or six months.
Paragraph 1 of the amendment deals with a matter which, in my opinion, is not contained in the bill. According to the reference which I have read, the amendment must be within the scope of the bill. The first paragraph is not within the scope of the bill.
As to the second paragraph, on a motion for third reading the bill may be sent back for amendment in any particular; that is, for amendment of any clause or clauses of the bill. But it could not be sent back for amendment in such a way as to alter the whole principle of the bill. In my opinion the second paragraph seeks not only to alter the principle of the amending bill which is now before the house, but also to alter the principle of the main act. Such an amendment could not be moved in the house on third reading; that is to say, a motion could not be made that the bill be not read a third time, setting forth the reasons given in the amendment. This being so, in my opinion it could not, on third reading, be sent back to the committee for amendments of this character. Accordingly I must rule the amendment out of order.
(Mr. Speaker J


Mr. E. G. Hansell (Macleod):: Before third reading is given I should like to say just a word. It will not take me too long.
I sat in the house yesterday and heard the speeches that were given on the second reading of this bill. I could not help but draw one conclusion. As I listened to these speeches the minister was reminded of things that he already knew. He was reminded of the importance of housing to the welfare of the family; that housing consisted of a material house, but within the house there lives a family making up what is known as the home. I think we sometimes get confused in our terminology, and perhaps that confusion is designed. We talk of home owners. They do not own homes; they own houses. The home is the institution that lives within the house. Housing is important therefore by reason of the fact that it contributes to the welfare of the home, or it could very easily contribute to the delinquency of family life.
We are told that the three great institutions in the world are the home, the school and the church. We usually say that, and place the home first. When it comes to caring for the welfare of the people in terms of home and family life, the policy of the government is contained within the strict confines of its monetary policy. We cannot do this and we cannot do that. No matter how desirable it is to the welfare of the people, or no matter how physically possible it is, we cannot do it because of some sort of financial restrictions. Therefore I am to conclude-I cannot help but conclude-that the policy of the government is more concerned with the perpetuation of an iniquitous, evil monetary policy or system than it is concerned with the welfare of the people.
I will simply conclude by saying that the financial brains of the government, the Minister of Finance (Mr. Abbott) if you want to pool those brains and put them within his skull-


Mr. Noseworihy:: There would not be room for them all.


Ernest George Hansell: In his monetary policy the Minister of Finance is contributing to the perpetuation and the strengthening of a great Frankenstein that will break itself, and is in the process of breaking itself, and in that process will break the people and the nation; in his financial policy he is just as much a slave to the dictates of that Frankenstein as any slave was to the lash of the taskmaster's whip. I say that, and I am not mincing my words when I say it. It is my profound conclusion that their policy to keep and preserve that Frankenstein is more important to them than the policy of keeping the family and the home and the life of our people intact and

building through the homes and the life of our people a great nation.
Motion agreed to and bill read the third time and passed.



DOMINION ELECTIONS ACT


Mr. Sarto Fournier (Maisonneuve-Rose-moni):: Mr. Speaker, by leave I would ask that the house revert to routine proceedings.


Mr. Speaker:: Has the hon. gentleman leave?


Some hon. Members:: Agreed.


Sarto Fournier: have the honour to present the third report of the special committee appointed to study the Dominion Elections Act, 1938, and amendments thereto.



EXCISE TAX ACT


Douglas Charles Abbott: the second reading of and concurrence in amendments made by the Senate to Bill No. 294, to amend the Excise Tax Act. He said:	I should like, by leave, to make this
motion now in order that the bill may be included in the royal assent which I understand is to be given later this day.
The amendments are in line with similar amendments that were made to the Customs Act, substituting twelve months for six months. I think the hon. member for Eglin-ton (Mr. Fleming) is aware of the nature of the amendments.


[Stage Direction]
Motion agreed to, amendments read the second time and concurred in.


Douglas Charles Abbott: the second reading of Bill No. 390, respecting grants to municipalities.


George Alexander Drew: I assume the minister has said all that he proposes to say.


Douglas Charles Abbott: Yes; I indicated on the resolution stage that I would be prepared to make my statement either then or on second reading. It was suggested that I should do it then, and I did so. It will be found at page 4216 of Hansard.


Mr. J. S. Sinnott (Springfield):: I wish to say a few words on this bill. Since I was the reeve of a municipality over a period of years I realize the extent of the relief that these municipalities are to receive from the federal
Municipal Grants Act
government. I take issue with the hon. member who had a few words of complaint about the taxes in the city of Ottawa.
Mr. Gibson,: Does the hon. member pay any?


John Sylvester Aloysius Sinnott: I am amazed at the complaints coming from the lumber king.


Mr. Gibson:: Mr. Speaker, I wonder whether I may direct a question to the hon. member? Does he pay any taxes in the city of Ottawa? Has he any idea what the taxes are in the city of Ottawa?


John Sylvester Aloysius Sinnott: Possibly before I get through the hon. member will know.


Mr. Sinclair:: Just contain yourself over there.


John Sylvester Aloysius Sinnott: So far as the city of Ottawa is concerned, the hon. member should know that the services rendered ought to be taken into consideration.


George Alexander Drew: Mr. Speaker, I think that the hon. member for Comox-Alberni asked an interesting question. Perhaps the hon. member could tell us whether he pays corporation or other taxes here in Ottawa.


Mr. Croll:: He is entitled to make his speech.


John Sylvester Aloysius Sinnott: When I get through with my speech, possibly the leader of the opposition will be able to contribute something.
When you own property along Island Park drive or along any of those other millionaire roads paid for by the federal treasury-I understand the roads were built by the federal authority-the roads are policed by a federal department; the grass is cut by a federal department. Members come here to Ottawa to perform a service for their constituents. When they come here I propose to see that they live within their means. However, if they acquire these properties with huge assessments they must know what tlieir taxes will be, if the tax is to be levied in accordance with the assessment. If they can afford to buy these expensive properties, naturally they should suffer the consequences.
I do not think the hon. member meant to begrudge the city of Ottawa a few paltry dollars. Why, a man coming from British Columbia, a man of his type, would consider that little sum of $760 only as pocket change.


An hon. Member:: Peanuts.


John Sylvester Aloysius Sinnott: Yes, peanuts. He has referred to another member from British Columbia who, while living within his modest means, is taxed at $550. Yet that gentleman does not complain.


John Lambert Gibson: What position does he hold?

Municipal Grants Act


John Sylvester Aloysius Sinnott: These members live in castles, in ivory towers; but when taxes of this kind are imposed they complain. They want to have their assessments lowered, so that they may have the benefit of lower assessments at the expense of the little fellow, the poor man.
I believe the assessment commissioner in Ottawa is efficient, and that assessments are carried out in accordance with proper values. The hon. member for Comox-Alberni would be well advised, if he cannot afford these luxuries, to dispose of his property and to buy another in which he could live within his means.


Donald Methuen Fleming: Mr. Speaker, this is a bill of some importance. Because of its importance I must express regret that it has been available to hon. members for so short a time. It is now exactly 12.45 o'clock, and this bill has been distributed in the House of Commons for only one hour. I doubt very much if hon. members have had the opportunity to read it.


Douglas Charles Abbott: Its terms are almost identical with those of the order in council which has been in effect for some time.


Donald Methuen Fleming: I obtained a copy of the bill from the distribution office just before coming into the house at eleven o'clock. In a matter of this kind, anxious as we are to co-operate in furthering the business of the house, and always recognizing the difficulty of pushing ahead with legislation in these days when we are sitting long hours, as well as the difficulty of having legislation printed in time for hon. members to review it, the inadequate notice we have had as to the provisions of this bill is most regrettable, measured in the light of its importance.
Yesterday we discussed the general scheme when the resolution was before the house, and I do not propose to retrace that ground at this time. However, in the limited time at my disposal I propose to make a brief review of the contents of the bill, and to offer some observations in regard to it.
I am sure the house will be glad to see a bill dealing with this subject, but I think it will view with disappointment the fact that the bill maintains a rigid formula, and is even more ungenerous toward municipalities than most of us had understood during the discussion on the resolution. After a review of the bill it can only be said that the provision made here for grants to municipalities is not only ungenerous but niggardly.
What is the scheme of the bill? No crown property, no property of any agent of the crown, whether incorporated or otherwise, is submitted to taxation at the hands of a

municipality. What is provided here is authority to the minister to make grants within certain very narrow provisions laid down in the bill.
Then, as to the way the scheme seems to work out, one progresses from one limitation to another. In the first place, in reckoning the value of crown-owned property in a municipality, the first thing done by the crown is to eliminate a great deal of such property. The crown eliminates:
(i)	real property forming part of an undertaking in respect of the conservation, irrigation, reclamation, rehabilitation or reforestation of land,
(ii)	a park, historical site, monument, museum, public library or art gallery,
(iii)	an improvement to land or structure that is not a building designed for the shelter of people, plant or movable property,
(iv)	real property under the control, management or administration of the national railways as defined in the Canadian National-Canadian Pacific Act, 1933, or a corporation, company, commission, board1 or agency established to perform a function or duty on behalf of the government of Canada, or
(v)	real property leased by His Majesty to a tenant from whom, by reason of such tenant's interest in that real property, a municipal taxing authority may collect real estate tax.
So we make those five deductions first of all from the value of real property owned by the crown or its agencies in municipalities.
The next such deduction is to remove from the total of crown-owned property, federal property that does not accept from a municipality any service referred to in the following terms: a service that-
(a)	the municipality customarily furnishes to real property in the municipality: and
(b)	is, in the opinion of the minister, a material service.
That is another far-reaching limitation, because if we take out of the total of federal properties those which have services only in respect of public roads and sidewalks, we have taken out of the category of properties with which the granting provisions of this bill are concerned, a great deal of property.
The third limitation is that the total of all such properties-that is to say, having eliminated all those properties in the sections I have referred to up to the present time, of which there are approximately seven categories-must exceed four per cent of the taxable property of a municipality, including that portion of the crown-owned property remaining after the subtraction of the properties in the seven categories I have mentioned.
So that unless the property survives all those tests there can be no benefit to the municipality whatsoever. But, sir, even at that point there is a fourth limitation that enters into account. It is this: that the minister is under no obligation to accept the valuation placed upon a property by a municipality.

Under this bill he retains virtually unlimited power to set the value that is to be put upon the crown property after reducing it by the elimination of property in the seven categories I have mentioned. Therefore 'he is going to have a perfectly free hand in establishing the values of crown property.
If the property survives all these limitations, a grant may be made. If you examine the provisions in regard to the grant you will see that in the first place it is not equivalent, even as applied to the limited value of crown property remaining after these various deductions have been made, to the rate of taxation as applied to other property in the municipality. The formula that is applied to determine the grant in lieu of taxes is equivalent to seventy-five per cent of the rate applicable to other property in the municipality.
The sixth hurdle in this sequence is that if the minister still chooses he is not under any obligation to make a grant on the foregoing basis. He may decide instead simply to pay for the services furnished to the crown property. In determining the amount to be fixed for the services, the minister still has a free hand. It is for him to determine what value shall be placed upon the services received or what deductions shall be made from the grant by reason of services that the minister considers the crown does not require at the hands of the municipality.
Then we come to the seventh obstacle in the sequence. Even if some municipality survives these six tests with respect to crown-owned property within its confines, the minister may still refuse to make any grant at all. There is no obligation upon the minister under this bill to make a grant even in those circumstances. The bill specifically and expressly provides that no right is conferred. If any hon. member attaches importance to the words "the minister may . . . out of moneys provided by parliament, make a grant to the municipality" and construes these words as imperative and the equivalent of "shall", I would point out that the draftsman of the bill has taken great care to make it clear that the word "may" means "may" and not "shall".


Douglas Charles Abbott: Quite properly so.


Donald Methuen Fleming: Not only has he stated that no right to a grant is conferred; he has been careful to insert the words "in his discretion".


Douglas Charles Abbott: It has always been perfectly clear that these are ex gratia payments and not payments as of right.


Donald Methuen Fleming: That is perfectly clear in the bill, and the minister made it perfectly clear yesterday that parliament was providing only
Municipal Grants Act
for ex gratia payments and there would be no compulsion applied to the federal government.
It seems to me that a review of the bill in these stages indicates that the benefits which a few municipalities are going to derive are very limited indeed. This is not an act of generosity on the part of the federal government, because-


Mr. Mcllraiih:: Oh, yes; it is a great improvement.


Donald Methuen Fleming: The hon. member for Ottawa West (Mr. Mcllraith) says that it is a great improvement. Where is the great improvement? Apparently the hon. member for Ottawa West is a champion of things as they are as applied to municipal assistance from the federal government.


George James McIlraith: I am thoroughly familiar with it.


Donald Methuen Fleming: If the hon. member is satisfied with the deal Ottawa is getting today from the federal government in respeot to property owned or occupied by the crown in Ottawa, all I have to say to him is that I think Ottawa is not getting a square deal.


George James McIlraith: I said it was a great improvement over the old situation.


Donald Methuen Fleming: An improvement over the old arrangement? I should like to see where the improvement lies.


Douglas Charles Abbott: $900,000 worth.


Donald Methuen Fleming: This bill simply purports to put into statutory form the terms of the order in council which hitherto prevailed. Where is the great improvement? I think hon. members who are concerned with the affairs of municipalities in this country, and particularly with the burdens that are cast upon the taxpayers in them by the ownership of property by the federal government, will not be satisfied with the limited help offered by this bill to the municipalities. If the hon. member for Ottawa West is satisfied with this; if he can see a great improvement in it, then I think he is viewing the acts of the federal government in this particular, as is not infrequently the case, through rose-coloured glasses, or indeed through magnifying glasses.
I fail to see where municipalities like Ottawa will be able to see any great improvement in this bill. Just look at the figures to be found in the estimates. Last year the minister budgeted for grants to municipalities, under the order in council which preceded this bill and which has been in effect for the last year or so, in a total of $1,600,000. He is asking the house to approve in this year's

Municipal Grants Act
estimates a total of $1,800,000, an increase of just $200,000. The figures that he gave us yesterday indicate-


Douglas Charles Abbott: The original estimate was $1,600,000 more than they had been paid before.


Donald Methuen Fleming: Of course it was, but I think the minister had better bestir himself and do something worth while before cackling too loudly over a most inauspicious beginning at extending a measure of belated justice to the municipalities.
At one o'clock the house took recess.
The house resumed at three o'clock.


Donald Methuen Fleming: I think I can conclude
briefly, Mr. Speaker. Prior to the luncheon recess I was stressing the fact that as the bill is drawn it sets up a series of hurdles or obstacles in the way of municipalities qualifying for the grant. The whole emphasis is placed upon the erection of obstacles in the path of municipalities seeking any assistance from the federal government, regardless of the extent to which ownership by the federal government of property located within the municipality reduces the total of assessable property upon which the municipality may levy its needed taxes.
Just prior to the noon recess it was suggested that this represents a great improvement. I take issue with any suggestion that this bill makes any great improvement in the relations between the federal government and the municipalities in reference to the exemptions now enjoyed by this government. It is true that the introduction of this limited method of assistance is some improvement over the system which prevailed prior to 1950, under which the municipalities received nothing; but I think the argument is quite untenable, as one hon. member argued this morning, that this bill represents a great improvement. All that was paid by way of assistance to the municipalities under this grant last year was $1,578,251.13, and by no stretch of the imagination can it be said that there was any very tangible assistance given them. All that is contemplated for the present year is a modest increase to $1,800,000.
I have already indicated that having regard to the extent of federally-owned property in this city, and the very high cost of municipal services, Ottawa is not receiving sufficient assistance from the federal government.


George James McIlraith: We agree with that.


Donald Methuen Fleming: I am glad to hear the hon.
member say he agrees, because I had a very different impression from his comment this morning, when he praised this legislation as a great improvement.


George James McIlraith: It is a great improvement,
a wonderful improvement.


Donald Methuen Fleming: I do not think there is anything great about it. If it is an improvement, it is a very modest improvement over an even more modest ancestor.
What is the extent of the assistance? If hon. members will look at the statement at page 4224 of Hansard for Monday, June 18, they will see that the ordinary grants under the four per cent formula, which is now to be carried into this legislation, provided only eighteen municipalities with a total of just $1,389,929.41. Then six western municipalities received grants in lieu of taxes on government grain elevators aggregating $74,186.80. Five municipalities received transitional grants respecting newly acquired properties totalling $1,663.19, and twenty-two municipalities received grants in lieu of special assessments for local improvements amounting to $112,471.73. Those four subtotals make up the grand total of $1,578,251.13. If that can be called great by any stretch of the imagination, all I have to say is that I do not understand the meaning of the word. I should say that as compared with nothing before, that is a very attenuated attempt at a beginning; and to assert now that, because we are being asked to appropriate $200,000 more this year than was available for these grants last year, that is a great improvement, suggests to me, as I said this morning, that the hon. member for Ottawa West (Mr. Mcllraith) is just viewing this proposal through a magnifying glass.
This bill does not make any attempt to draw certain distinctions which with great respect I think might well be drawn in an approach to a matter of this kind. The four per cent formula, hedged around as it is with such a multiplicity of hurdles and obstacles, is a test that is far too rigid and exacting. I believe there must be some test, some yardstick applied; I do not suggest that the grant should be simply decided by the minister in every case without due regard for some established yardstick. But the yardstick that has been selected here, it seems to me, fails to take account of some aspects of the matter which I think should be taken into consideration.
As I mentioned yesterday, there is the fact that in many cases property owned by the crown in the right of the dominion is not used simply for the purpose of rendering a service to the people of the municipality. In

many cases it is put to a revenue-producing use; yet there is no attempt in this bill to recognize that fact. Nor is there any attempt to recognize the fact that frequently a use made of property by an agency of the crown may be directly competitive with the interests of persons who are taxpayers in the municipality. In fairness I should say I believe there is some hope of adjustment there, in that certain of the crown agencies mentioned by the minister yesterday are to be invited by the government to make grants to the municipalities in lieu of taxes. But if you examine the formula by which these crown agencies, whether corporate or otherwise, are to be guided in arriving at the amount of the grant they should make in lieu of taxes, the minister goes no further than to say it is to be fair and reasonable. As a yardstick that is just about as vague as anything could be. Unless the government goes further and lays down the rule that these corporate emanations of the crown should pay, in respect of property owned and occupied by them in these municipalities, the same rate that they would pay if they were private taxpayers, then justice will not be done to the municipalities in respect of those grants.
I cannot find any warrant for some of the other fine distinctions drawn in this bill, especially in the matter of services. The bill rejects services rendered by the municipality by way of building roads and sidewalks, and they do not enter into the calculations of the Minister of Finance in arriving at the grants to municipalities. Surely that is drawing too fine a line; that is grossly unfair to the municipality, especially in the light of the fact that the costs of municipal services have been rising to such prodigious heights in recent years.
One can only express regret, Mr. Speaker, that the emphasis placed in this bill is negative, that the whole stress put upon the bill is upon the negative features and the difficulties put in the way of municipalities seeking to qualify to receive even the modest amounts provided here. The first requirement, it seems to me, is an altogether fresh and realistic approach to the problems of these municipalities. We would like the Minister of Finance to do something to assist at that very important level of government. This bill, I am sorry to say, will contribute very little to the accomplishment of that worthy purpose.


Mr. J. T. Richard (Ottawa East):: I shall be brief, Mr. Speaker, but I would not want this house or the people of Canada to think that the people of Ottawa do not appreciate what is being done in this bill, nor on the other hand to believe that they are fully
Municipal Grants Act
satisfied with what they are receiving. I believe we should put first things first. Some years ago the city of Ottawa was receiving nothing. It was difficult, and it took time, to convince the people at large in the Dominion of Canada and the members in the House of Commons that the municipalities which had public buildings of the government of Canada within their boundaries should receive any special grant. The first grant given to the city of Ottawa was for the sum of $100,000. It was given by means of a vote from year to year, and a few years ago it was raised to $300,000.
Under this formula, which is rather complicated and which is incorporated in a statute, the city of Ottawa has received $962,000 for this year. That is. more than three times the amount received in the previous year. The formula was arrived at by mutual understanding. I would not want this house to think there are any serious differences between the assessors of the city of Ottawa and the assessors who act on behalf of the government of Canada. There is, however, one point on which there is disagreement, and that is that the formula allows only seventy-five per cent of the excess over four per cent to be taxable at the public school rate for the city of Ottawa.
Nevertheless under this formula the city of Ottawa is certain of a fixed sum based on the assessment from year to year. I only wanted to point out that if anyone wishes to say this is a niggardly sum or that there has been no improvement, certainly the people of Ottawa do not feel that way. They are looking forward to improvement in the formula, and to an increased grant as the development of the city progresses. There is one thing that should be remembered, and that is that the city of Ottawa also receives some benefits from grants made to the federal district commission. Again there is agreement between the city and the federal district commission. I am sure that the government and the members at large look upon the city of Ottawa as a national capital and will be only too glad to approve this legislation. Perhaps they can improve it, as I have suggested, by making a grant to the full one hundred per cent instead of the seventy-five per cent.


Joseph William Noseworthy: As I
listened to the member for Ottawa East (Mr. Richard) I was reminded of the biblical parable of the poor man who was satisfied with the crumbs that fell from the rich man's table. It would seem to me that his point of view was that of the poor man who was grateful for any crumbs which fell from the rich man's table, even though now those crumbs may seem to be like crusts of bread.

Municipal Grants Act


Jean-Thomas Richard: I am glad you consider a million dollars a crumb.


Joseph William Noseworthy: I believe that parable
well represents the point of view expressed. Actually in the past that has been very much ' the position of the municipalities in their relationship to the federal government. In recent years the federal government has been prepared to pass out a few crumbs to the municipalities, and some, not all, of the municipalities have been grateful for those few crumbs.
The thing we have overlooked in this discussion is that Ottawa is not the only city concerned with this bill. In considering the bill I should like to emphasize the note which the member for Eglinton (Mr. Fleming) struck in his concluding remarks, concerning the importance of government at the municipal level in any democratic system. The tendency here seems to be to underestimate the importance of municipal government. Any services that a municipal government can render to a community should be rendered by the municipality because that government is closest to the people. The further removed any government is from the people, the less efficient that government is likely to be. In a democratic system we must not take any measures that will remove from the municipalities the responsibilities for those phases of government which they can render best.
In recent years the municipalities have found they have not sufficient income to meet many of the responsibilities which are theirs to perform. Their field of taxation is pretty well limited to real property, and is probably the most limited of all levels of government. We saw that in the depression. It was not the federal government or the provincial governments who went into bankruptcy, but scores and scores of municipalities across this country found themselves going into bankruptcy. We, and other individuals, hesitate to render very much aid to education. We still leave the cost of education to be borne largely by municipal governments. There is a fear that, if the federal government put too much money into education, in some way they will have a voice in the curriculum and in the administration of the school system. I should never want to see in this country an educational system whereby all financial responsibility for it was removed from municipal governments. Those countries in which educational costs have been centralized and have been borne entirely by central governments have shown us that there is always a tendency for the local people to lose interest in their schools; and what applies to the school system applies

to many of the other services that the municipalities render. My point is that municipal government is so important in a democratic system that we must do nothing to undermine government at that particular level.
In the past it was taken for granted that crown properties should be exempt from taxation. But gradually over the years the federal government has adopted the practice, as I mentioned at first, of giving a few handouts to the municipalities. This bill provides for nothing more than larger handouts by the federal government to the municipalities. The amount that the municipality is to receive in lieu of taxes for federal properties is still largely left to a matter of dickering between the municipality and the federal government. That, I submit, is just not good business practice. There is only one way in which this matter can be handled properly in the interests of the municipality and in the interests of good democratic government. The federal property should be assessed on the same basis as is any other property in the municipality and the federal government should expect to pay municipal taxes on that property on exactly the same basis as does any other property owner in the municipality. If the federal government has reason to believe that the assessment is too high or that it is unfair, it has the opportunity-as has any other taxpayer in the community- of going before a board and there arriving at a fair assessment. So long as the question of payment in lieu of taxation is left as it is, a matter of negotiation between municipalities and the federal government, so long will you have discrimination. You are opening the door there for political patronage on the municipal level, just as we find political patronage existing within other services at the present time.
Government buildings or government offices are placed in certain municipalities, certain towns and cities, because in the opinion of the federal government authorities that is the centre from which those offices can best serve the community, the province or the country at large. As to Ottawa, I do not think Ottawa as a city had a great deal to say about whether or not this should be the national capital. Ottawa was chosen as the national capital because it was felt that this was the one place in Canada that would best serve such a purpose at the time when the selection was made. Whether the hon. member for Ottawa East (Mr. Richard) and other Ottawa members are quite content with the handout that Ottawa gets from year to year-


George James McIlraith: He did not say that.


Joseph William Noseworthy: -is not a matter of importance. It is neither here nor there as

far as the discussion of this bill is concerned. Whether or not the people of Ottawa are satisfied is probably another question. But whether the municipality concerned be Ottawa, Toronto, Montreal or the smallest municipality in this country, I can see no good reason why the federal government should not be required to pay taxes on all federal property, assessed by the same method as are other properties in the municipality.
There was, of course, a day when municipalities thought that there was some advantage in getting a government office or a government building established within the municipality. There were benefits. There are, of course, benefits which accrue to any municipality; but there are also responsibilities and there are also services. It is to the certain advantage of a city or town that any industrial enterprise should be established in that city or town; but because the city or town is going to derive some benefit from the establishment there of the industry or commercial enterprise is no good reason why the citizens of the city or town should give that enterprise property tax-free in perpetuity. That practice is being rapidly abandoned. Cities and towns which in times past sought to attract industrial enterprises by granting exemption from taxation have come to change their point of view; and today the general practice is that even those enterprises which at one time were considered to render to the municipality sufficient service to warrant exemption from taxation are being taxed today. There is an increasing demand that all such properties should bear their fair share of municipal taxation. I think it would be difficult for anyone to give good, sound, logical reasons why the citizens of any particular municipality should be called upon to support a federal government office or building which serves not only the municipality but, in some cases, the country, in other cases the province and in still other cases the surrounding countryside.
There is another feature to be considered. Actually what the government is doing in this bill is merely passing on to the municipalities what they have taken from them by reason of government policy which has led to the present rising cost of living. Within the last year every municipality in this country has had to raise its tax rate because of the rising cost of living which has resulted from this government's policy. Many municipalities have had to step up their tax rate as much as twenty mills owing to the rising costs of material and services. For that this government's policy is to a large extent responsible. In increasing the size of the
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handout that the government are giving to the municipalities by this bill, they are simply handing back to the municipalities all or part of what they have taken from them as a result of their policy which led to that rising cost of material and general living. In the light of the importance of municipal government, and in fairness to all municipalities, because so long as this present system is followed there is bound to be a certain degree of unfairness as between municipality and municipality, the question of the taxes the federal government should pay on any government piece of property in a municipality should not be left to negotiation so that some municipalities can get a better deal or drive a harder bargain with the federal government than others. It should be on a straight assessment basis, and the federal government pay their taxes as other taxpayers in the country.


John Lambert Gibson: I am
glad to see that the hon. member for Springfield (Mr. Sinnott) is in his seat this afternoon. In his remarks this morning he said something about me which in fairness to other hon. members in the house I think I should answer. Being in a charitable frame of mind this afternoon, I should like to think that his remarks this morning came from the fustian part of his nature instead of being dictated by that keen, analytical financial mind of his which has been so keenly developed during his long term of office as the reeve of the municipality of Brokenhead.
There was only one of his comments that I resented slightly. He suggested that in my remarks on the resolution stage I had complained personally of paying what I considered to be high taxes in the city of Ottawa, and that I had suggested, by inference or in some other way, that they should be unloaded in some manner at the expense of the little fellow. There is only one thing that I can say to him. I have always flattered myself that in a small way I have tried to carry my fair share of whatever burdens came my way; and even if I could not do it I would probably be like the hon. member. I would get out and try to earn enough money at some extramural activities, possibly in the grease business, or something of that kind, which would allow me to maintain my fair share of whatever burden I would be asked to carry.


Mr. Stick:: Small town mentality.


John Lambert Gibson: In his remarks he referred to the modest little house in which I happen to live on Island Park drive, which he referred to as millionaires' row. I am afraid he does not know his geography in Ottawa

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very well. Certainly, the one millionaire's row we have here-and he has probably driven around it and seen the great estates- is in Rockcliffe, where the true millionaires of this town live. I gather their taxes are very very low. I think probably he has inadvertently put his finger on one of the main difficulties in the Ottawa taxation situation. It is the fact that our Ottawa city council has seen fit to acquire large sections of adjoining townships and have left out this one very desirable location, which contains people who are able to pay very heavy taxes. They have been left out of the scheme of things here.
That Ottawa has not taken in Rockcliffe is one of the factors contributing to the very high rate of taxation here. I notice that some of the newspapers have mentioned that for the first time a member of parliament from other than Ottawa ridings has taken some interest in the taxation problems of Ottawa. That may be a fair comment, but let me point out to them that I was trying to do a service to the other hon. members here, because after all we as members represent the city of Ottawa as well as our own constituencies. I was trying to point out to the other hon. members that from my own personal experience, and from the experience of other hon. members who have found it necessary to purchase homes in Ottawa, we have suddenly become very conscious of the difficulties with which the taxpayers of Ottawa are faced in meeting this terrifically high municipal taxation that is in effect in this town.
It just appears to me, as I said in my remarks during the discussion on the resolution stage, that Ottawa is in effect, by virtue of the fact that most people living here are civil servants, a company town; and it seems to me that we as members of parliament, and indeed the government, should be very much concerned with the welfare of our employees, just as we would expect any company which was running a company town to be concerned with the welfare of its employees.
I realize that at the present time the government probably has not the power, but I would suggest that it might be a very worthwhile thing for this government to consider asking the citizens of Ottawa or the council of Ottawa whether they would not consider having one of the keener minds on our treasury board associated with them on their board of control. I say that because I feel that they could well use some of the expert financial advice that is given to the Minister of Finance (Mr. Abbott) by these experts in their regular capacity.


Leonard T. Stick: Free of charge.


John Lambert Gibson: As I understand, we have a
precedent in the town of Yellowknife in the Northwest Territories. We have three representatives on the board there, and I do not think we would be breaking any new ground by trying to make the same arrangement in the city of Ottawa. I would even go further than that. Now that we have this great map in the buildings here showing what Ottawa is eventually to become under the Greber plan, I think it might be an excellent idea for this government to give consideration to the establishment of a federal district here to administer the affairs of this town, much in the same way as is done in the federal district of Columbia. I think there is much more validity for such a suggestion in Ottawa than there is in the district of Columbia. I would suggest that that might very well be done. Under a plan like that it would be possible that the residents of Ottawa would feel that they were being justly treated. Perhaps we would have to establish a tax rate for the residents of the city on a composite basis. We might take towns like Victoria, British Columbia, Regina, Saskatchewan, and Hamilton, Ontario. These are three average towns across Canada. After doing that we could probably set a composite tax rate comparable to theirs that might make the residents of Ottawa feel that they were being fairly treated.
I should like to point this out to the Minister of Finance also, if he feels that we are being fair to the city of Ottawa-I am not going to say that we are not-by giving them $1 million now, or $900,000 and some odd: surely we can go back over the period of years when we gave them only $100,000 and say that if the $900,000 that we are giving them now is fair, when we were giving them $100,000 we were being grossly unfair to them. The city of Ottawa must have a very high bonded indebtedness by virtue of the fact that the federal government was not paying its fair share of the tax burden in this city in those years.
There is another point about this city. I believe that there is far too much taxable land that is tax free in this city. I saw a news item the other day which said that there was a curling club in this city tax free, and a lawn bowling club tax free. I think these are the kind of things that a federal government representative on the board of control, which I suggested, might well look into, and probably try to assist this city in getting itself into shape to give its citizens a tax rate that is comparable to the tax rates of other cities in Canada. I think that the federal government could

very well concern itself more directly with the problems of its employees who live in this city of Ottawa.


Mr. Daniel Mclvor (Fort William):: Mr. Speaker, I think all of us want the city of Ottawa to get its due, and I believe we can agree that it will, so long as the two members representing Ottawa East and Ottawa West hold their present jobs.
But Ottawa is not the only city in Canada. There is Fort William, a city we consider just as modern, just as progressive and just as clean as Ottawa. Those of us in Fort William are going to present this legislation and the speeches supporting it, to our city administrators, so that they may present their case and receive the benefits to be received by other cities in Canada.
Let me pay my tribute to the federal district commission, because I believe they spend their money well. Around these parliament buildings I have never seen a man leaning on his shovel or his hoe, or riding in his wheelbarrow; and on that one occasion each year when we want to use the lawns the federal district commission could not be more courteous. We are grateful to them for that.
I know the city of Ottawa has two sources of revenue in addition to those mentioned by the hon. member for Ottawa East (Mr. Richard). It has the attraction of the House of Commons, so that tourists may visit these buildings, or people from the constituencies may see their members in action. The city has the further advantage of the salaries paid to those who work in these buildings. These people, in their turn, pay taxes, such as those to which references were made by the hon. members for Springfield (Mr. Sinnott) and Comox-Alberni (Mr. Gibson). Those of us from Fort William believe we should qualify because, in addition to our large customs building, which houses the income tax branch, and the branch of the Department of National Revenue, we have the old post office which has been refitted for income tax purposes, and the large post office which houses the branch of public works, the mounted police and other utilities. We would not be without one of them because we believe they bring in revenue while adding dignity to our city.
I thank the minister for having introduced the legislation. We will be on his track later on.


Mr. J. H. Dickey (Halifax):: Mr. Speaker, I wish to congratulate the minister and the government upon the principle that will be included in the law of this country when the bill is passed. My colleague from Halifax
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expressed his views in the matter on Monday, and I should like now to adopt his remarks.
I must say I was surprised by the language of the hon. member for Eglinton (Mr. Fleming) in describing the bill, and by his attitude toward the legislation. I understood that the hon. member for York South (Mr. Noseworthy) was in agreement with him; but perhaps I should not be too surprised by the attitude of the hon. member for York South. Certainly I am as much in disagreement with him as with the hon. member for Eglinton.


Donald Methuen Fleming: Did the hon. member ever sit on a municipal council?


John Horace Dickey: No, I have not. But if the hon. member for Eglinton had any knowledge or appreciation of the difficulties that have faced municipalities this legislation is intended to assist, he would not have taken the attitude he took this afternoon.


Mr. Fraser:: The hon. member for Eglinton has had a good deal of municipal experience.


John Horace Dickey: I am sure the hon. member has full knowledge of the very real problem facing all municipalities in this country. It is quite obvious however that he does not have any appreciation of the special problems of municipalities having a high proportion of federal tax-exempt properties within their boundaries.


Donald Methuen Fleming: Like Ottawa.


John Horace Dickey: Yes, and like Halifax and other cities.


Donald Methuen Fleming: I was prepared to give them more than the minister does.


John Horace Dickey: We in Halifax thought that when the federal government a couple of years ago announced the policy of paying special grants in lieu of taxation, a great step forward had been taken. We feel, in addition, that their action in bringing in this legislation and incorporating this principle in a bill to become the law of the country is a further step forward. Certainly I agree with the hon. members for Ottawa West (Mr. Mcllraith) and Ottawa East (Mr. Richard) in the remarks they have made concerning the effect of the bill.
The minister, in discussing the matter at the resolution stage, dealt at some length with one of the main points which I shall discuss briefly this afternoon. His observations appear at page 4224 of Hansard where he states that he made it quite clear in his statement of November 14, 1949, which was the original negotiation announcement of this policy, that the crown must reserve to itself the right to establish the valuation. I do not think we can quarrel too much with that statement. The crown naturally would have to take

Municipal Grants Act
special care to see that valuations of property were done in a fair and reasonable manner. Then he went on to say:
These are ex gratia payments and, for reasons which I think are fairly obvious, the crown could not put itself entirely in the hands of the local assessors.
I agree with the minister that from the legal point of view these are ex gratia payments, but that is only from the purely legal point of view. As well as being ex gratia, these payments are ex justitia; they are based upon justice and reason.
The minister went on to describe arrangements which would be made for agreement between the federal government and local assessors, and pointed out that in one or two cases, one of which was Halifax, the department had retained outside advisers to assist in coming to a conclusion.
The city of Halifax is appreciative of the efforts made to reach a fair and equitable settlement in the matter, so far as grants to Halifax are concerned. However, I am' sure the minister is fully aware that only the first step has been taken. We hope that it is not just the first step and that in the next few years as this legislation becomes more familiar and as we get used to its administration there will be room for adjustments which the cities and municipalities think should be made.
I think the government has been right in drawing up the bill in the way they have. I would point out to the minister that the real test of this legislation will be the manner in which it is administered. I am sure that he will give special attention to matters of that kind which will be coming up in the future.
The hon. member for York South (Mr. Noseworthy) suggested that this bill would open the door to political patronage at the municipal level. I do not know just what the hon. member intended to convey by that statement, but certainly the meaning I took from it was quite unpleasant. I am sure that many of the municipalities receiving assistance under this bill will quite properly resent that kind of implication. He said also that these payments were handouts. I want to assure the hon, member that nobody in Halifax, Ottawa or any of the other municipalities that have been faced with these special problems considers these payments to be in any sense handouts. We are not happy to have suggestions of that kind made in this house.


Mr. G. A. Cruickshank (Fraser Valley):: Mr. Speaker, I should like to say a word about this bill and apparently I should govern my remarks by the list that has been presented.

I notice from the list that Halifax is getting $197,394 under this four per cent formula. Being a family man, I appreciate what constitutes a formula. These formulas are put out in little tins, some containing peas, some containing carrots, some containing beans or other things, and they are just about as sensible as this four per cent formula.
Getting down to my own riding, I notice that Maple Ridge receives $53.66 under the four per cent formula, and $126 even under the three and a half per cent formula, which is the smaller tins of peas and beans. I have great sympathy with Halifax but-


David Arnold Croll: There is another one for Maple Ridge, $53.66.


George Alexander Cruickshank: The hon. member is bringing to my attention the fact that $53.66 is also being paid to Maple Ridge, but I mentioned that. This legislation is mainly due to two hon. members from British Columbia. Some years ago the hon. member for Coast-Capilano (Mr. Sinclair) introduced a resolution along these very lines. He is now in a more fortunate position to bring about legislation of this kind. As long as he listens to some of my advice he will help to bring about legislation that may be of assistance.
The other hon. member who has assisted in this is the hon. member for Vancouver East (Mr. Maclnnis). If I understood correctly what he said, he was contending that government properties should be subject to regular assessment and pay taxation at the regular rate. I agree entirely with that. I can see no reason why government property should not be assessed in the normal manner and taxed at the regular rates.
When I first came to Ottawa the grant being made to this city, if I remember correctly, was $100,000. At that time I sat where the hon. member for Comox-Alberni (Mr. Gibson) now sits. I objected strenuously to that grant being made. But I had the privilege of visiting Washington, the great capital of the United States, and I saw what the forty-eight states had done to build up the capital of that country. I began to realize that Ottawa was not the capital of Ontario, it was the capital of the dominion, and I was ready to agree to an increased grant. I repeat that government properties should be subject to regular assessment and taxation just the same as any other business or residential property.
If this city is the capital of Canada I contend that its form of government should be similar to that of Washington, D.C. I do not want to say anything derogatory about the local government of Ottawa, but I might mention that in Vancouver, the third city of

Canada with a population of some 400,000, there are only eight aldermen and no controllers. You would need to be a mathematician or a member of the Department of Finance to keep track of the number of controllers and aldermen in this little town, of 135,000 people.
If the people of Canada are to put up the money, as I believe they should, to make this the most beautiful capital on the North American continent, then they should be protected by a form of government similar to that in Washington rather than the present government. Whenever you pick up either the Journal or the Citizen you see where Charlotte and Tardif are quarrelling over a pinball game or something else, and all the time we are putting up the money. I disagree strongly with that idea. I do not care whether Charlotte and Tardif like it or do not like it; if they come out to British Columbia we will show them how to run a great city without government assistance.
I want to come back to these figures. It is easy for the hon. member for Halifax (Mr. Dickey) or for the hon. member for Vancouver North-I should correct that and say "Coast-Capilano"; they gave up a good name and took on a poorer one-to argue as they have, but I think something should be said in fairness to the minister and the system he is trying to bring into effect.
In my riding is located the largest army camp in western Canada. The government has been criticized over that camp, even by the people of Chilliwack. That camp has now been set up as a permanent army camp to form part of our national defence. Its payroll contributes largely to the welfare of the district. Many people criticized the government for taking four or five hundred acres out of taxation.
Within two miles or so of where I live is one of the finest airports in the Dominion of Canada comprising 900 acres. I have in my office, from the days when I used to be a member of the municipal council, a file filled with criticisms of the federal government and the Department of National Defence because there would be no taxes received from these 900 acres of what had not been very profitable land-I will put it that way. For the last five years some 900 children within my own district would not have had the benefit of education of any kind but for the facilities of that camp. During the disastrous floods of 1948 the people who had to be evacuated would have had nowhere to go if it had not been for the facilities at that airport. In the plans now being formulated for the evacuation of civilians from Vancouver and New Westminster in the event of bombing, it is planned to have evacuees handled at this airport.
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I am saying this to point out to those in my own riding that it is not simply a question of saying they have lost the municipal revenue from some 900 acres of land. They must not forget what they have gained through the facilities at the Abbotsford airport in the way of education for their children, accommodation during the floods of 1948 and so on. The same applies to the Chilliwack army camp. However, I do not think the minister has gone far enough. The present formula is a step in the right direction, but eventually these grants should be made in every municipality, regardless of size. That should apply whether it is the great city of Ottawa, the lesser city of Halifax, or even the little area out here called Carleton, where the residents apparently have to walk 200 yards to get their mail, which I admit is a great drawback and hardship, particularly when you consider some of the speeches they have to carry home with them. However, I agree with those hon. members who have suggested that there is only one proper formula to be applied in connection with the taxation of this property; that is, government property should be assessed and taxed in exactly the same way as other property, with the same right of appeal to the assessment courts or other civilian courts.


George Alexander Drew: Mr. Speaker, the discussion
that has taken place has related substantially to Ottawa, but it has also dealt with other cities and municipalities in which particular members are interested. It seems to me that for the reasons put forward by the hon. member for Fraser Valley (Mr. Cruickshank) all hon. members should be interested in the situation in this city. I believe the hon. member put his finger on the crux of the situation when he said this is the capital of Canada, and that in considering the provision to be made for it and the plans that will be carried into effect for its improvement we must regard this as the property of all Canadians. I am not going to discuss the suggestion he has made as to the method of government, other than to say that he has put forward something which definitely will call for consideration in the years ahead as the over-all plan takes more complete form.
I was struck by the attitude of the two Ottawa members who have discussed this subject. The hon. member for Ottawa East (Mr. Richard) has said he feels sure the people of Ottawa would not wish to have the people of Canada generally think they are not grateful for what they receive under the existing provision. Then of course, to be sure, he is on the other side of the argument as well: he goes on to state that neither

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does he wish to say they are entirely satisfied. Having sought to place himself in both camps in that respect, he leaves it in that position. The hon. member for Ottawa West <Mr. Mollraith) fairly well sums up his position when he says he thinks this is an improvement.


George James McIlraith: He will sum it up in due
course.


George Alexander Drew: I am going to sum it up,
because so far the hon. member has simply left it at that. I would be grateful if he would be a little more exact as to what he thinks should be done.


George James McIlraith: We give the leader of the
opposition (Mr. Drew) precedence here.


George Alexander Drew: I might remind hon. gentlemen, including the hon. member for Fraser Valley, that Carleton county now embraces a very substantial part of the city of Ottawa, so I am speaking also for one segment of this city. It should be remembered that we are dealing with what was regarded simply as a temporary expedient to meet a situation everyone recognized had to be faced in some way. The hon. member for Ottawa East said he thought there had been little disagreement as to the assessment of the property in question. That is correct. As I understand, there has been no disagreement. I also understand it has been agreed that the buildings in the city of Ottawa owned and operated by the Canadian government, other than the parliament buildings themselves, should be assessed at a figure which, if taxes were paid in the ordinary way, would have produced during the past year a tax of $3,338,900, as compared with the $962,392 the city received. Certainly $962,392 is not an insignificant figure; nevertheless we must appreciate that any payment, no matter how large or small it may be, is adequate or inadequate in relation to the figure for which it is substituted.
It has been pointed out that in this city other payments are made, and also that certain other services are rendered by the dominion government in connection with policing and activities of that kind. Of course those are not in substitution for the local responsibilities in that respect. The city of Ottawa carries on all the ordinary functions and responsibilities of a city of this size. The figure being paid, therefore, must be related to what would be received from those buildings were they not operated by the government. Making full allowance for any services that are rendered, comparing the $962,392 with the $3,338,900 which would have been received from those buildings on a normal assessment rate and normal taxes,
[Mr. Drew.l
then I say that without question the amount being paid to the city of Ottawa, the capital of Canada, is not adequate to give the city a fair return for the taxes it is compelled to give up in relation to those buildings.
Having 'said that, I want to point out that there are buildings which fall into different categories, and in discussing this whole subject we must remember that fact. For instance, as has been pointed out by some hon. members, there are buildings that are definite attractions from the tourist point of view. Others, while perhaps providing no utility service or no revenue service, might be placed in a special category. They are only a relatively small part of the buildings or operations under consideration. Then there are those operations which are of particular service to the community, such as post offices and buildings of that kind. Those should be placed in a special category, and some return made for the property set aside for those purposes. There is a third category, and that is the category to which the consideration of the members of this house must be directed, whether or not we at this time deal with that subject in any effective way. In that category come those buildings and those activities, industrial or otherwise, which operate on a revenue producing basis and which should pay taxes the same as any similar activity.
At a time when the government is extending its activities into many fields for defence production, in the form of crown companies and otherwise, this is something which must be faced. It certainly is not fair to any community, and all communities in Canada depend largely or in many cases almost entirely upon taxes obtained from real estate, to take over large areas in those communities, whether they be urban or rural municipalities, calling for the services that are necessary in such an area, policing, educational and others, and then not pay the normal tax rate for the property. I can think of many extremely important undertakings which were opened up during the last world war which caused great difficulties for the municipalities in which they were located. The people of those municipalities would have been the very last to have expressed any wish that those operations or undertakings should not go forward in the area. Nevertheless they did face great difficulties as a result of what was done.
Take as an example the great explosives plant at Ajax. This called for a large tract of land, not only for the explosives plant but also for the houses required for the

43G7
workers who went to that new and segregated community. Under the general provision that governments do not pay taxes, almost insurmountable problems were created in regard to educational and other facilities of that nature. Then in the case of the very large aircraft development at Malton, great areas were set aside for the plant and still larger areas to house the workers who came there to take part in that production. Again that area certainly welcomed a development of that kind, but it created immense difficulties. Since that time special steps have been taken and it has been possible to meet these particular problems, but that redress cannot begin to take care of all cases of that kind. Once again we are confronted with the necessity of a large expansion of defence production. Once again it will be necessary for the government to take over new tracts of land or acquire additional land in areas where there is already production of that type. I am satisfied that some steps must be taken to meet such a situation.
As for the bill which is before us, it is simply a bill to interpret in statutory form the order in council which introduced this device last year. As has been pointed out by some of the members, there does not yet appear to be any clear reason why four per cent happens to be the figure of concentration which becomes the starting point for taxes of this kind. Without in any way reflecting on the motives which prompted the remarks of the senior member for Halifax (Mr. Dickey), it is perhaps easy to understand why he regards with a greater measure of approval this hit or miss system, and that is all it is, than might the members from other communities of a similar size. Halifax receives the second largest payment of any city in Canada. As compared with Ottawa, which received $962,392, the city of Halifax receives $208,489.93. I have no doubt that the city of Halifax should receive that, and probably a great deal more. However, that is a very substantial payment in comparison with the city of Vancouver, for instance which receives a total under these various types of payment of $172.12. There will not be any suggestion that there are not large government operations in the city of Vancouver which should be contributing their share, and which are earning revenues which could provide some contribution to the ordinary services maintained by the city of Vancouver.
It is noticeable that neither the city of Montreal nor the city of Toronto receives any payment under this. It is all very well to make facetious remarks about cities such as
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Montreal and Toronto not deserving any payments, but the fact is that if a system is sound every city should be dealt with on the same basis.


David Arnold Croll: Toronto is receiving about $8,000.


George Alexander Drew: Is it in one of the smaller categories?	.


George Alexander Cruickshank: It is with Maple Ridge, I guess.


George Alexander Drew: It is in the same category as Maple Ridge; that is correct. Under grants in lieu of special assessments for local improvements Toronto receives $8,874.13 as compared with the $208,489.93 for Halifax and the sum of $172.12 for Vancouver.


Stanley Howard Knowles: They would not get a very large subway for that.


George Alexander Drew: No, not very great. The member for Fort William (Mr. Mclvor), whom all of us love-I use that word advisedly-does sometimes rather strain that affection by the blanket approval that he gives to all those associated with him. I do admire his loyalty, but his unfailing certainty that all is well in this best of all possible worlds so long as things are done by Liberals is sometimes a little difficult to accept as an unqualified principle, no matter with what amount of affection we may regard the hon. member.


Douglas Charles Abbott: There may be the odd exception that proves the rule.


George Alexander Drew: As the Minister of Finance (Mr. Abbott) says there may be the odd exception where perhaps that applies, but as a blanket principle it is a rather difficult principle to accept. The member for Fort William, having given his unqualified assurance to the people of Ottawa that all will be well so long as the present members for Ottawa East (Mr. Richard) and Ottawa West (Mr. Mcllraith) straddle the fence in the way that they have today, he then goes on to say that while it is true Fort William has not come in for benefits, he is going to pack his bag and go back there to make them do their best to get under the fire. The member for Fort William will have to make some new suggestions to them, because they were not able to qualify under this four per cent formula during this current year. There were a lot of municipalities in Canada that were not able to qualify, no matter how deserving they may have been. It is significant that throughout the whole of Canada, including cities, towns and villages, there were only eighteen that were able to qualify for the ordinary grants under the four per cent formula. May I repeat, Mr. Speaker, that if a principle is a principle at all and not just

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something pulled out of a grab bag, then it is something that will apply to every municipality where operations or undertakings of the same kind, carried on by the dominion government, are carried on for the benefit of the people in those communities and for the benefit of the people of Canada generally.
This bill now before us perpetuates an ineffective, inefficient and unsatisfactory procedure that was adopted as a temporary expedient by order in council. I recognize the fact that a temporary expedient is better than none; but I do not think it should be written into the form of a statute and purport to interpret, as one hon. member put it, a principle in the form of law when it establishes no principle that any of us can possibly discern. It is perfectly true that, as the Minister of Finance (Mr. Abbott) interjected, this is the taxpayers' money. Certainly it is the taxpayers' money. But all of the money that is paid into the municipal, the provincial and federal treasuries across Canada comes from the same set of pockets across Canada.


Douglas Charles Abbott: Will my hon. friend allow a question?


George Alexander Drew: Certainly.


Douglas Charles Abbott: I know that he is conversant with this matter. Does he know whether the province of Ontario pays any taxes to the municipality on provincial buildings in various municipalities?


George Alexander Drew: As a matter of fact they are not paying in respect of a number of properties which would fall into the same category. But I would point out that they are making [DOT]certain provisions for the municipalities by the diversion of moneys received from such things as the gasoline tax and other taxes, to support the municipalities. They are also paying to the municipalities, for the very purpose of relieving their municipal tax rate, 50 per cent of all the costs of education in the province of Ontario. This year, in the province of Ontario alone, this amounts to a payment of close to $50 million to the municipalities for that one reason. The province of Ontario-and I am only saying this in response to the question put by the Minister -of Finance-through its government, has sought to recognize the difficulty of the municipalities in this respect.


George Alexander Cruickshank: The leader of the opposition (Mr. Drew) will admit that is in the last couple of years, though.


George Alexander Drew: I will admit that it was introduced during the second year that I happened to be premier of that province; and that is the same law that is in force today.
'Mr. Drew.]
In any event, when there is any division as between federal and provincial governments, I am quite prepared to have my remarks apply to the principle involved, and I do not wish to have any qualifications in regard to that principle, whether it be at the provincial or at the federal level. I am satisfied that as governments-whether they be federal, provineial or municipal-go into the operation and ownership of properties which earn revenue, those properties should pay taxes on exactly the same level as will any other property in those communities. I believe in free enterprise. I believe in free enterprise being protected against specially-subsidized government operations in the same field. In many of these cases governments are getting into operations where they compete with these organizations which, as ordinary corporations, must pay taxes. I am satisfied that it is in the interests of good government and of efficiency of operation to have those organizations pay taxes which put them on the same competitive level as any other organization in the same field.


Douglas Charles Abbott: Will my hon. friend allow another question?


George Alexander Drew: Yes.


Douglas Charles Abbott: I do not want to interrupt him, but does he know whether or not the Ontario hydro pays municipal taxes on its installations?


George Alexander Drew: They do not, on the same level. But may I also say that they have been making certain special allowances to the municipalities.


Douglas Charles Abbott: But on the reasoning that my hon. friend was adopting, they should pay taxes on the same basis.


George Alexander Drew: I thought I had made it clear that I asked that there be no reservations made in my remarks in regard to that point.


Douglas Charles Abbott: That is fine.


George Alexander Drew: No matter what may have been sound in the past, I think we have come to the time when, if governments at any level are going to extend into operations which compete with ordinary operations, they should pay taxes on those operations so that they may be subject to the same tests and the same standards of efficiency as is any other operation engaged in the same business.
As to this present bill, naturally it is one of those cases where it is wise to accept whatever is put forward on a provisional basis. But I can only express regret that a method which is so unscientific and inadequate for the purpose of balancing up these payments across the country is to be perpetuated in statutory form. Nevertheless,

since the government puts this proposal forward as the means by which it is going to continue whatever payments are being made, I am making these remarks now to urge upon tne government that, in view of the fact that there is to be a second session this year, they be prepared to review this whole subject with the idea of examining this matter on the basis of some sound principle.
I would hope that they would come forward with a plan which will deal with properties of different kinds: those properties that are simply for the general service of the people of Canada, such as these buildings in which we are now meeting; those buildings which perform a special service for the locality such as post offices and buildings of that kind, and which are not operating anything in the nature of a business; and those operations that are straight business operations, operating in many cases in competition with private businesses. In that case I would hope that the government, within this present year, would be prepared to accept the principle-a principle that I regard as a sound one-that where the government goes into operations of this kind, those government operations will pay taxes.


Douglas Charles Abbott: Ottawa would not get much on that basis.


George Alexander Drew: I am quite prepared that Ottawa should stand on exactly the same basis as any other municipality in regard to whatever principle is applied. But I would point out again that, excluding these parliament buildings, the buildings in the city of Ottawa which are operated by the government and which are collecting revenues of various kinds, are assessed at a level which would have produced during this current year a total of $3,338,900 Instead of the $962,392 they are receiving.


James Sinclair: Plus the cost of the district commission, of course.


George Alexander Drew: I was careful to point out that any special return they are receiving from the district commission or otherwise should be balanced against anything they receive; but that, subject to those balancing figures, the figure that the city of Ottawa receives should be a figure which bears some closer resemblance to the actual amount of revenue they would receive from those properties in the ordinary course of events. I do not see how the city of Ottawa is going to be able to carry on the services it is called upon to perform as the nation's capital as well as a city of homes and ordinary activities-whether it be under a regular municipal government or under a district commission such as has been suggested by the hon. member for
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Fraser Valley (Mr. Cruickshank)-unless they receive a more adequate return for the number of buildings that have been taken over and are being taken over all the time.
In this case, Mr. Speaker, I have put these remarks forward recognizing the fact that we are going to have another session; seeking also to emphasize the fact that any system which only provides payment to eighteen municipalities throughout the whole of Canada in relation to government operations cannot be a sound system; and suggesting that there is no reason for this arbitrary 4 per cent basis, but that the members of this house should be called upon to consider some scientific formula which will not only be good for the present but will meet the situation which is created with the ever-increasing entry of the government into business activities and other activities of various kinds across Canada.


David Arnold Croll: May I first remind the leader of the opposition (Mr. Drew) that the first direct grant made to municipalities in order to relieve the burden on those municipalities was made not while he was in office but while the Hepburn Liberal government was in office.


George Alexander Drew: Oh, no, Mr. Speaker. Reference was made by the hon. member for Fraser Valley (Mr. Cruickshank) I think to the system of grants to education at the level that was mentioned of 50 per cent.


George Alexander Cruickshank: No.


George Alexander Drew: That was introduced while I was in office; but may I point out-


George Alexander Cruickshank: No, Mr. Speaker. Even the leader of the opposition cannot put words in my mouth.


An hon. Member:: No, sir.


George Alexander Cruickshank: I admire his versatile veracity, but if he will check Hansard he will find that I said no such thing.


Gordon Knapman Fraser: You made some reference to when they came into being.


George Alexander Cruickshank: Do I have to take on the hon. member for Peterborough West while I am endeavouring to look after the leader of the opposition? If the leader of the opposition will check what I said he will find that I said, through the daily press the present government of Ontario are boasting particularly of what they have done in the last year or a year and a half. I think that can be checked in Hansard, and certainly it can be checked in the daily press.


George Alexander Drew: I do want to keep the record straight. I certainly had no thought, and have no thought, of trying to put words in the

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mouth of the hon. member for Fraser Valley because, as a matter of fact, that is not necessary. The fact is, my reference related first to the question asked by the Minister of Finance (Mr. Abbott) who asked whether the province of Ontario recognized those obligations, and I pointed out that the government of Ontario had undertaken to relieve the municipalities of the burden on real estate by assuming 50 per cent of the educational costs. It is quite correct, as the hon. member for Fraser Valley has pointed out, that these figures have increased year by year, but that was the formula which was effected several years ago. In regard to what was said by the hon. member for Spadina (Mr. Croll) when he said that this was introduced by Mr. Hepburn, the idea of grants by a provincial government to municipalities, I would remind him that the first grant to the municipalities by a provincial government was back in 1867, and not in the time of Mr. Hepburn. May I say that I also have a very high regard for Mr. Hepburn, a higher regard than some of his associates have displayed on different occasions.


Stanley Howard Knowles: Who came first, the hen or the egg?


David Arnold Croll: Just to put the record straight, I must repeat that sometime in 1934-perhaps it was in 1935-when the municipal problem was presented to the government of Ontario we gave them one mill on their assessment in order to assist them, in lieu of taxes and in lieu of other matters. In addition to that, we gave increased grants for education, which were later further increased.


Donald Methuen Fleming: And took the municipal income tax away from them at the same time.


David Arnold Croll: Let us get back to this bill.


Douglas Charles Abbott: Hear, hear.


David Arnold Croll: This bill in a small way deals with a very special problem. The members who represent constituencies that have benefited have come here and have said that it is a very nice bill indeed. No one begrudges the amount of money that is being paid out to them, the million and a half dollars.


George Alexander Cruickshank: We do not go quite that far.


David Arnold Croll: Of course, as the hon. member for Eglinton (Mr. Fleming) has said, it is an improvement. I share his views to a great extent, except that I do not share the violence of his language in the description of the bill.


Gordon Knapman Fraser: You should.


David Arnold Croll: As the leader of the opposition has said, it is really a faltering step. At the present time Ottawa will receive almost
[Mr. Drew.)
75 per cent of the amount of money to be paid out. I emphasize-and I express the opinion of the house-that no one begrudges a nickel of that. This is our capital city. This is our pride and joy, and we take a great deal of pleasure in it. We want it to be a beautiful city, we do not mind whatever money they require to spend in order to make us more proud of it; but it seems to me that we are approaching this on entirely wrong principles.
I have not been able to find a principle in the bill, although I have tried. I thought that after the hon. member for Fraser Valley had spoken I would understand the bill thoroughly and that he would explain it clearly. But he got off onto some baby food, and I did not get much information from him.


John Horne Blackmore: Skim milk.


David Arnold Croll: Skim milk for the rest of the
country. None of the 18 cities concerned begrudge the amount that Ottawa will get. I think it is a good idea, but the point I make is that the 4 per cent formula does not do justice to Ottawa, and it does less than justice to a great number of municipalities. I am going to remind the Minister of Finance about something that he said. Let me say further that, as I see the problem, the dominion government ought to pay taxes in the same way as everybody else pays taxes. This is not a recent view that I have held; it is a view that I have held for a long time. I quote him in order to emphasize my argument. When the question with respect to tax exemption for our fighting men in Korea was raised by the opposition the Minister of Finance said: "We do not want to set up a special group of taxpayers in this country."


Douglas Charles Abbott: It has been done by our constitution, and for very good reasons, too, as my hon. friend knows perfectly well.


David Arnold Croll: Whether it was constitutionally possible or not, my hon. friend found a way of getting around it and did grant that exemption finally.


Douglas Charles Abbott: I am speaking of the exemption of the dominion government, not the service people. I am saying that is preserved by the constitution.


David Arnold Croll: Of course it is preserved by
the constitution. We have modified the constitution from time to time. I remember the day when you used to have to obtain a fiat if you wanted to sue the dominion government, and unless you got a fiat you were out of court. We have modified that, and

no one was particularly hurt by the result that people are getting a greater measure of justice.
To suggest that crown corporations should be invited to make contribution is wrong. It is either right or wrong. The crown corporations ought to pay taxes in the same way as everyone else pays taxes.


Douglas Charles Abbott: That is not under this bill.
I have said that before, Mr. Speaker. This bill has nothing to do with that.


David Arnold Croll: I am just pointing out the
shortcomings of the bill so that the minister can consider it at a future time. Certainly we are going to endorse this bill.


Mr. Fournier (Hull):: When?


David Arnold Croll: When you increase the four
per cent formula and pay a proper tax. One of the objections made by the minister was that he did not think the dominion government ought to be put into the hands of the local assessors.


Douglas Charles Abbott: Only as to valuation.


David Arnold Croll: Yes; the suggestion is of course that the local assessors might raise the valuation some. That is not beyond the realm of possibility. Local assessors have been known to do that, but there is a way of meeting that. If the local assessors did the dominion government in, they could stand being done in every now and then. They do other people in very well. Besides, there is a formula-*


Douglas Charles Abbott: Always the people pay, anyway.


David Arnold Croll: The argument everlastingly has been made when the municipal officials went to the provinces and asked them to pay taxes or went to the dominion and asked them to pay taxes: What difference does it make? The money is taken out of one pocket and put into another. But you take it out of different pockets. The pockets do not belong to the same people. That is the trouble. The municipalities will not even have any pants with pockets in them if you keep on refusing to pay your full share of taxes. In so far as the provincial government not paying taxes is concerned, here is an opportunity for the dominion government to set an example. After all, this is the Great White Father. We are the people who have an over-all responsibility. If we begin paying taxes on government property the municipalities will drive the provinces into the position where they will have to do the same thing.
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It seems to me that is an excellent example of what is possible. We should have gone the whole way. It is an important matter to the municipalities. They have turned every way, trying to find a few dollars here and there, and yet on the other hand they see these large government buildings, which bring them some advantage, not paying taxes. That is a sore spot.


Douglas Charles Abbott: Very few of them refuse those buildings.


David Arnold Croll: Of course not; why should they? They are a part of Canada-and there are decided advantages to the local people. But there are disadvantages, too. It seems to me the government might well consider going the whole way and making it easier for the municipalities, which will bring them taxes not only from the dominion but from the provinces.
I would have thought that on this occasion the government would have taken advantage of the expression of feeling in the house when the original motion was debated, and settled this matter once and for all. I do hope that in due time the minister will set an example for the provinces. The federal government is doing a very good job of educating the people in the payment of income tax. It would be good for the dominion to feel that it is paying its share, so that the municipalities will not feel that they have been donfe in by the dominion government. I do hope the minister will give consideration to the requests made here from all sides of the house.


George James McIlraith: Mr. Speaker, I for one am frank to say that I welcome the bill, and consider it a great improvement in the treatment of this subject. When I was first elected to the House of Commons in 1940 this subject was generally ignored. There was however a specific bill giving an annual grant of $100,000 to the city of Ottawa in lieu of taxes. When that bill came before the house at my first session one hon. member in the opposition put forward the proposal that it be cut off altogether, and that there should be no grant whatever. The idea was not popular, however, and out of fairness I must add that the opposition did not pursue it. Indeed the hon. member who made the proposal receded from it.
Treatment of the subject was postponed during the war years. In 1944, we were able to have a joint committee of both houses of parliament to deal with the subject. Unfortunately that committee was set up at the end of the session and its work was cut short by the termination of the session. However, it did one useful thing in that it

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served to acquaint all hon. members with the nature of the problem, and focused it on their minds.
The grant involved in the city of Ottawa bill was increased in the following year to $300,000. In the last year there was a temporary order in council making provision for an interim payment, and today we have this bill. When I say the bill represents a great improvement I believe any hon. member who has examined developments on this subject since confederation will agree with me.
I was somewhat disappointed at the violence of the language of the hon. member for Eglinton (Mr. Fleming) in dealing with the subject, and his attempt to hammer it into the position of being some party matter that could be bandied back and forth between the parties. I do not believe we can deal with the municipalities of this country on that basis.
Their true position is that merely of statutory creations of the various provinces. In Ontario the municipal act and the present system of municipal government were brought into legislative being by the Baldwin government in 1849, which is one hundred and two years ago. There has been no change in the principle of that legislation since that time. It has been patched up a little each year, but the basic principle has never changed.
The situation is that we have municipalities, the creatures of the provinces, saddled with responsibilities in social welfare and other fields that were never thought of one hundred and two years ago. It is a completely changed set of obligations, and all costing large sums of money. Along with this however they have had the same basis of finding revenue, namely out of the land tax on real estate. I suggest the problem is not one that can be solved by the dominion government alone. It is a very difficult one, and perhaps one the dominion government may be wise not to stress too strenuously. Provincial-municipal difficulties are very real, and we could easily do more harm than good by interfering in something outside our legislative competence and jurisdiction. While we realize where the responsibility for that problem lies-and 1 have every sympathy for provincial and municipal governments in trying to face up to it-it seems to me that there needs to be a complete revision of the jurisdiction as between municipalities and provinces, and a revision that will put the financial responsibilities now placed on the municipalities into line with their sources of revenue.
[Mr. McDraith.l
I believe that would be a common ground for almost all parties in the house, and all members who have given any real thought to the situation. It is not good enough in dealing with the subject to say, "Oh, if the dominion government pays taxes, just like any other taxpayer, the problem will be solved." It just is not that type of problem.
I for one will welcome the day when a provincial government will come forward and will really look at the municipal legislation and make an attempt to bring municipal authority and responsibility into line with municipal financial sources of revenue. When that is being done, and as part of the process, I have no doubt at all that we will have to look at the responsibility as between the dominion and provincial governments. I welcome the opportunity of doing that, and I will welcome the day when we can do it. I look forward with eagerness to that day, and I hope it may be done in my time.
I for one am not satisfied with the one-hundred-and-two-year-old system. The hon. member for York South (Mr. Noseworthy) dealt with the grant to Ottawa, and seemed to single it out. I do not know what view he was seeking to convey, but he did make use of some biblical references. I did not like particularly his use of biblical references as related to this subject-but that is neither here nor there. I do object strenuously however when he describes as a crumb a grant of one million dollars to a municipality trying to carry on. I suggest it is something different from that, and that a million dollars of the taxpayers' money is not a crumb either to the municipality, the dominion government or to anyone else.
I noticed today that, regardless of the position hon. members may have taken as to the adequacy or inadequacy of the bill, there is one refreshing change. There seems to be unanimity as to the idea that something should be done. It was interesting and refreshing to observe that the disagreement was only as to the details as to what and how much should be done.
The leader of the opposition (Mr. Drew), who represents the adjoining constituency, made one reference with which I am strongly in accord. He used the hydro as an example of an enterprise which was carrying on business in competition with ordinary business and not being taxed in the ordinary way. I was glad to hear the leader of the opposition make that direct and unequivocal reference to the desirability of its paying taxes as an ordinary taxpayer.


George Alexander Drew: I do not want to interrupt the hon. member for Ottawa West, because I

think we are in almost complete agreement on the general purposes, but I would point out that I was referring to those aspects of that commission which are in competition with other business.


George James McIlraith: I so understood the leader of the opposition.


George Alexander Drew: I want that to be clear; I do not want to be misunderstood. There are certain services performedi by the hydro electric power commission that are general services and which are not in competition with any other business, but they are also in business which is competitive. What I said applies to that as well as to the other.


George James McIlraith: I think there was a perfectly clear understanding of the remarks of the leader of the opposition. I am afraid that I cannot differ with him on that point. As I said, I welcome his statement. However, I was sorry to hear him use the figure obtained from the city hall about the tax the dominion government would pay-$3,339,000- because a figure taken in that way is misleading. It is not .a complete and accurate figure. The leader of the opposition gave some reason why it is not wholly accurate and there are other reasons which are quite obvious. If the dominion government paid taxes on all properties it would involve the city in providing all the services that are provided for the ordinary taxpayer.
The point I wish to make in that connection, and this point is particularly strong in my mind as a result of my work on the joint committee a few years ago, is that to arrive at a correct figure requires a good deal of detailed examination of the services being rendered and whether or not they are normal services rendered to any taxpayer, and so on. That varies sharply from one municipality to the other, as I learned in the committee. That was the sole point I wished to make in referring to it.
It is well also to realize that this matter of the dominion government making large grants to municipalities raises another implication which has been put forward here today. If you are making large grants to a municipality, are you going to have a say in the administration of its affairs? That is a question which I am sure the municipalities will wish to consider most carefully. I think it is something that ought to be foreseen.
The question of a federal district commission has been put forward in this house for many years and has received a great deal of consideration. I do not think it is relevant to a discussion of this bill, but perhaps it should be remembered that the district commission does some good work in the area that
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is of benefit to the area as well as to the rest of Canada. These things should be considered in detail.
Then as to the amount of the grant, I seem to have troubled the hon. member for Eglinton (Mr. Fleming) when I said that I welcomed this bill as a great improvement. In my opinion the amount is not adequate, but at least we now have a formula upon which we can put forward representations concerning the inadequacy and what I would consider the improper allowances in computing the grant. Mention could be made, although I do not think it is relevant on the principle of this bill, as to whether one type of building should come under one subsection and so on.


Donald Methuen Fleming: Is it not rather violent language on the part of the hon. member to talk about these being improper allowances?


George James McIlraith: Inadequate allowances.


Donald Methuen Fleming: The hon. member said
improper.


George James McIlraith: Perhaps I am subject to correction by the hon. member for Eglinton on that point. With his precision of language, he would have used the word "inadequate" instead of "improper". I am not able to define clearly when an inadequacy becomes an impropriety. You could argue about that at some considerable length. I gladly substitute the word "inadequate" for "improper" if the hon. member will find it more agreeable. Without taking more time, I believe I have expressed my views in general on the bill. I want to close with the note on which I began, and that is my appreciation to the government for at long last bringing forward this overdue bill. I welcome the opportunity to declare myself as supporting the principle of the bill.


Stanley Howard Knowles: Mr. Speaker, for just a few minutes I should like to speak in support of the position taken on Monday by the hon. member for Vancouver East (Mr. Maclnnis) and the position taken in the house today by a number of hon. members on the government side, particularly the hon. member for Spa-dina (Mr. Croll). It seems to me that just as the federal government expects the people of Canada to pay their taxes, the federal government should come clean on this matter and pay grants equal to what would be the municipal taxes on government-owned property.
The Minister of Finance (Mr. Abbott) relies strongly on section 125 of the British North America Act which reads:
No lands or property belonging to Canada or any province shall be liable to taxation,.

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The hon. member for Spadina has already pointed out that until recently we had the fiction-I use that word advisedly-that the crown could not be sued without the consent of the crown, in other words without the grant of a fiat. During this session we have passed legislation doing away with that fiction. There are other fictions to be found in the British North America Act itself. For example, we have section 9 which reads:
The executive government and authority of and over Canada is hereby declared to continue and be vested in the Queen.
We know what that means; we understand that language, but in point of fact the authority in charge of this country consists of the ministers of the Canadian cabinet. Similarly there is section 54 which reads:
It shall not be lawful for the House of Commons to adopt or pass any vote, resolution, address or bill for the appropriation of any part of the public revenue, or of any tax or impost, to any purpose that has not been first recommended to that house by message of the Governor General in the session in which such vote, resolution, address, or bill is proposed.
There again is a fiction that does not bother us very much. Every time a money bill is brought in a minister stands up and says that His Excellency the Governor General recommends the bill to the consideration of the house, but never since I have been here has there been a message from the Governor General brought into this house assuring us of that fact. We know what happens, and as a matter of fact I prefer it that way; it is the government that takes the responsibility for money bills, not the person who happens to be the nominal head of the country. I emphasize the point that the exact wording of section 54 of the constitution is being completely disregarded; we treat it as a fiction. Well, if that is the case with these other sections of the British North America Act which I have cited, I think we could do the same with section 125. We need not amend it. We can leave it there and continue to claim that property belonging to Canada is not legally liable to taxation, but that need not prevent the government from making grants in lieu of municipal taxation. One might find certain classes of property such as post offices, which are in every community, and which might not be included; but apart from a very few exceptions like that it does seem to me, as the hon. member for Spadina has said, that the government should come clean and pay grants in lieu of taxes on federal property to all municipalities in which federal property is situated.
As the hon. member for Ottawa West (Mr. Mcllraith) says, this four per cent formula that has been worked out is something definite. It improves the position of Ottawa,

and I for one do not begrudge that at all. But, as has been clearly pointed out, it still leaves Ottawa about $2 million short of what it would get if it received the taxation that *could be levied on all federal property in this city if they had the right to do so. In view of the unfairness of this situation to Ottawa itself, in that it does not get the full amount it should, together with the uncertainty as to the wisdom of this formula which has been expressed just as forcefully on the government side as on this side, I think the suggestion of the leader of the opposition (Mr. Drew) should be taken seriously and this bill should be laid over at least until next session.
I have heard a number of hon. members opposite express some concern about the language of the hon. member for Eglinton (Mr. Fleming), which was referred to as strong and violent. I did not realize that his language was quite as strong as that; he did not even shout as loudly as he sometimes does. I noticed that what really exercised the Minister of Finance (Mr. Abbott) was the way the hon. member for Spadina spoke. It was not the language he used; it seemed to me it was the force of his argument that really bothered the minister. Quite frankly I feel that this legislation should not be proceeded with at this time; in fact I am rather startled that the government should ask that this bill be dealt with this session, particularly in view of the desire to get the urgent business through. I wonder why a contentious measure of this kind should be brought forward, particularly when on the basis of the order in council and an item in the estimates the various cities that have been getting these payments could continue to get them and in the meantime this matter could be given further study. I suggest in all seriousness that the minister should discuss with some of his colleagues the advisability of having one of them move the adjournment of this debate, and let this matter stand over until the fall session for further consideration, which I would hope might result in a fair deal for all our municipalities.


Solon Earl Low: On a
measure as important as this I think all groups in the house should state their position. I do not like the idea of making grants to municipalities from the federal treasury, and I do not think the bill should provide for grants at all. My own view is that the municipalities of Canada ought to be able to present to the senior governments assessment notices and tax bills just as they present them to ordinary citizens. However, I concede that the British North America Act does circumscribe the federal government with

certain constitutional limitations which may necessitate a change in that act sometime in the future; but we should be looking forward to the day when that change can be made, so the municipalities will not have to come hat in hand, like a bunch of beggars, asking the federal government for a handout. That is not the right way to do business at all. Under the circumstances I think the bill is taking the wrong approach.
There is another thing I do not like about it. When we take the position we have taken in this bill we hedge our offer around with qualifications and escape clauses to the point where no one is certain what the bill means or when a municipality may have any rights. The Minister of Finance (Mr. Abbott) has placed in the bill certain qualifications which, while making it appear that he is being very generous to the municipalities, make sure that the grant is not going to be established as a matter of right in any circumstances. I do not like that approach to the matter. At the same time I am prepared to admit, together with the hon. member for Spadina (Mr. Croll), the hon. member for Ottawa West (Mr. Mcllraith) and various others, that it is a faltering step in the right direction. We hope the federal government will get its feet under it and be ready to take a proper step toward relieving the municipalities of the burden imposed upon them by the fact that the federal and provincial governments have very large amounts of property in those municipalities.
I am not saying that even if the terms of this bill were extended and a more generous formula applied, that would solve the problems of the municipalities. I think the hon. member for Ottawa West put his finger upon a very important point. One of the things I have had against the people of Ontario, to be quite frank, is that they have been so slow to make changes which have been proved necessary for many years.


Mr. Blue:: Oh, we are not so slow.


Solon Earl Low: Anyone who comes from the west notices that the first thing. Out there we do not wait 102 years to make a simple change in the municipal act. I think it is high time we got out of the rut, out of the cave we have dug ourselves into down here, and made some changes so the municipalities would have a chance to get along. I quite agree with the hon. member for Ottawa West that it is high time the municipal act was changed. But even if that were done there would have to be some change also in the attitude of the people in the municipalities.


Donald Buchanan Blue: We are doing all right.
Municipal Grants Act


Solon Earl Low: If we could get some of these people who conduct sales out in the country to just confine themselves to their sales we might be able to make some progress in this house.


Donald Buchanan Blue: Well, the auctioneer does not hit a hard blow.
The Depuiy Chairman: Order. I would ask the hon. member not to interrupt the hon. gentleman who has the floor.


Solon Earl Low: The situation in Ottawa, taking that as an example, is not solely the result of too small a grant from the federal government; I am free to admit that. My position is similar to that of the hon. member for Comox-Alberni (Mr. Gibson); I own a home in this city, and I pay taxes on it.


An hon. Member:: You live in Ontario.


Solon Earl Low: I do; and I like Ontario very much. But even if the grant to the city of Ottawa were increased there would have to be quite a number of changes in the attitude of the city fathers here and the board of control, before they could overcome their problem. They have made a number of blunders in this city of late which have put them in a difficult position. I have been interested in studying the taxation situation in this city for some time. I note, for example, that in 1930 public school supporters in this *city paid 31-75 mills on their assessment. 'The rate continued to increase until it reached a peak of 39 mills in 1936. After remaining at that point for about four years it began to decline, until in 1945 it was back almost to where it was in 1930. Since then it has gone up every single year. The rate last year was 47i mills, and this year another substantial increase has been announced bringing it up to around 52 mills. Thus in a period of six years we have had an increase of something like 20 mills in this city. One of the blunders that I think they made here that caused a great deal of difficulty and which has placed a tremendous burden upon the taxpayers is that they bit off a whole lot more than they could chew in this annexation business. They were prompted, of course, by the federal government's great plans for a greater and more beautiful capital city for the dominion. We all agree that this capital city should be a real capital city, but we do not believe that the city should be asked or prodded by the federal government or anyone else to take steps that are too long for it to be able to keep its own balance. Now, they have done that. They went ahead and annexed in one step too much territory around the whole city. They find now that they, have to provide services for this district and are spending huge sums of money in
4376

Municipal Grants Act
order to provide those services in districts where the people were quite content to live without them for a time.
What is the situation now? The tax rates go up and up until, as the member for Comox-Alberni (Mr. Gibson) has said, the people are practically burdened down. That in itself is bound to bring a reaction in the sale value of the property as time goes by. When speaking of the member for Comox-Alberni, I am reminded that he made a rather interesting suggestion. I believe he suggested that the city of Ottawa ought to have a member of the treasury board sitting with the board of control to determine some features of the government of the city. As I say, I was interested in the suggestion, not so much because I agree with it, but because it might be a place for the Minister of Finance to have his colleague the hon. member for Springfield (Mr. Sinnott). If the member for Springfield were put on the board of control as a representative of the federal government, he and Charlotte ought to do a pretty good job of governing Ottawa. I am quite certain he would add weight to the board of control at any rate.
The hon. member for Comox-Alberni is quite right, taxes in this city are outrageous.


An hon. Member:: What has this got to do with Bill No. 390?


Solon Earl Low: It has quite a lot to do with it. I am coming to that point. One of the reasons that taxes in the city of Ottawa are outrageous is that the government of Canada has failed to take its responsibility when it was one of the prime movers in the attempt to build a bigger and better capital city of Ottawa. It is chiefly because of the plans laid by this federal government that the city of Ottawa found it expedient to take the steps in annexation which I have outlined. As I have already pointed out, the steps they took in annexation have brought upon them a much bigger burden of taxes than the people ought to have to bear.


Mr. Riley:: In Carleton?


Solon Earl Low: I am not confining it to any particular area, but it is certainly true in Gloucester where I live.


Mr. Gour (Russell):: I shall take care of that.


Solon Earl Low: In that area taxes over the period of the last two years have increased up to three hundred per cent. That is the way they treat the people in those areas who have not services and have no prospect of getting services for some years to come. Surely, that situation places a responsibility upon the federal government, and they ought to be recognizing that responsibility. Instead of bringing in a bill of this kind they ought
iMr. Low.)
to bring in a bill that would provide the municipalities in which there is a substantial amount of federal government property with the right to present a tax bill to this government the same as the municipality presents to any holder of property, whether it is business or residential. Those are some of the reasons why I cannot support the principle of the bill.
(Translation):


Joseph-Omer Gour: Mr. Speaker, circumstances make it necessary for me to say a few words in this debate.
(Text):
During the past five years expropriations by the various federal departments have taken place in my riding, and part of it was annexed by the city of Ottawa. I have the honour to have the leader of the Social Credit party as one of my constituents. He said he voted for me during the last campaign, but I am not so sure about that. It is really a pleasure for me to congratulate the Minister of Finance (Mr. Abbott) upon the measure this government has taken to ameliorate the tax burden of our citizens. In my opinion it is peculiar for people to criticize him for improving the situation. There should be no criticism when there is improvement. I shall not say anything about the city of Ottawa because there are two members here representing the city and proud to do anything they can for their people. If they are able to get a little more money from the government for these properties, I think they are right in doing so. I hope they will succeed in getting more, because a great part of my riding has been annexed by the city of Ottawa.
When the time comes for the minister to give the cheque to the city of Ottawa I should like him to remember to give more of the money for the part of Gloucester that the city annexed. It is quite true, as the leader of the Social Credit party has said, that the taxes in the annexed part have more than trebled, and it will be years and years before the city council can give those ratepayers any better service. I am not asking the government for anything, nor am I criticizing the administration of the city of Ottawa. I do not think it is fair for the members of this house to criticize the administration of the city council, a body elected by the public. I think these people should be more careful of the way they talk.
I am just asking for more generous treatment of the annexed district of Gloucester until such time as the city is in a position to give service by way of sidewalks and so on to which the residents are entitled.

I should like also to say a word to my friend the Minister of Transport (Mr. Chevrier) who has expropriated about 3,000 acres of land in Gloucester for the Uplands airport. The township of Gloucester will no longer collect taxes on those 3,000 acres. I should just like the minister to reflect on the fact that the township of Gloucester will have to build roads at a cost of about $20,000, because of this expropriation. In the last three years, through expropriation or annexation by the city of Ottawa, the township has lost about two-thirds of its taxable land and is still obliged to build roads. I am sure that with the good Minister of Finance that we have, and the way this government wants to aid the municipalities, some way will be found to help them. I am not like some people who want the federal government to throw its money about. The minister has to be careful about that. It is all right for our good friends to say that this government should throw its money about, but when the time comes for taxes they do not say the same thing.	[DOT]
There is one thing I want to say in conclusion. Any minister of the government is always welcome to have buildings constructed in my riding. I am always happy to see these buildings erected, and I shall soon ask you to build some more. At the same time I hope that he will find his way clear to give a little more help with regard to taxation.
(Translation):
Mr. J. A, Bonnier (St. Henry): Mr. Speaker, I notice that since he has come to town, the leader of the opposition (Mr. Drew) seems to be much more generous than when he was in Toronto-


Lionel Chevrier: You are right.


Mr. Bonnier:: When he was in Toronto, the Ontario government derived its revenue from Ottawa just as the Quebec government counts on Montreal. In fact, the people of Montreal provide the government of the province of Quebec with approximately 40 per cent of its revenue. In other words, this percentage of revenue in the city of Montreal is appropriated by the provincial government, and the Ontario government behaves in the same way. The latter derives part of its revenue from Ottawa while the dominion government continually spends large sums of money in the capital. That is the difference between the two governments.
The government of Ontario operates its liquor stores. It also levies important revenues through a tax on gasoline. In addition, it draws large sums of money from its automobile licence bureau. In other words, no branch of the provincial government
Municipal Grants Act
spends money in Ottawa, while the federal government provides a livelihood for approximately SO per cent of Ottawa's population. The citizens of the capital city should therefore be happy to obtain a grant from the federal government.
The dominion government derives no revenue from Ottawa; on the contrary, it spends large sums here. When parliament is in session, members spend thousands and thousands of dollars in Ottawa.
That is the difference between the two governments. When the leader of the opposition was in Toronto, the Ontario government, of which he was the leader, was not over-generous. Why? It is true that the position of leader of the opposition in the House of Commons is quite different from that of premier of Ontario.
(Text):


Robert Fair: Mr. Speaker, most of the discussion on this bill so far has been centred around buildings in cities. I see that the Minister of Finance (Mr. Abbott) has ordered in another drink, so perhaps he is going to give us in the near future something worth while by way of relief.


Douglas Charles Abbott: It is water.


Robert Fair: I understand that is all that is allowed in this particular part of the house.
There is another section of the country that I think should also be taken care of, namely the country districts in which military camps are located. This morning for a moment or two we discussed the camp at Wainwright. This last spring particularly-and the same thing has happened in other years as well- many of our roads up in that part of the country were destroyed because of military trucks and other heavy equipment being used on them. We do not have paved roads up in that part of the country. While the municipality banned trucks and other heavy traffic from the roads, they were not able to prevent military equipment from passing over and breaking up those roads. VThen the minister is giving consideration to this matter, I think he should also consider some grants or taxes- and I think taxes would be a more appropriate name-to take care of damage done to the roads, and other such things.
I might also state that in that particular town of Wainwright, prevision is being made, at the expense of the taxpayers of the town and district, for school and hospital accommodation of some of the personnel at the camp as well. Those who have advocated taxes on government property are, I believe, taking a step in the right direction. Now that the government has made a small move, I hope they will continue-that after creeping they

Municipal Grants Act
will walk-and will carry on their program until justice is done in connection with the taxation of federal buildings and other property.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Beaudoin in the chair.
Section 1 agreed to.
On section 2-Definitions.
Daniel Aloysius Riley: I should like the minister to give some information with regard to the national harbours board property which is of considerable value in several of the ridings in various parts of the country. I know that the municipalities are anxiously awaiting some word about a formula for grants from the federal department in lieu of taxation with respect to this valuable property which is also a burden on the municipalities as to services.


Douglas Charles Abbott: As I may have mentioned on a previous occasion, corporations such as the national harbours board have been instructed to negotiate with the municipalities appropriate tax agreements for the facilities owned by those harbour boards. Docks, of course, would not be included in the negotiation, but things such as grain elevators and other facilities would be included.
While I am on that point, there is something else that I perhaps might mention. It may be of some interest to the committee. While I of course have no accurate figures, I should point out that in connection with these various types of crown corporations, including Canadian National Railways, we estimate that the grand total of municipal taxes paid in the course of the year is probably some $7,500,000.


Donald Methuen Fleming: There are a couple of questions that I should like to ask with regard to section 2 of the bill. In the house yesterday there was some discussion concerning canal properties and canal works. Is it a correct interpretation of the provisions of section 2, subsection (C), that in reckoning up the amount of class A federal property, canal properties would be included?


Douglas Charles Abbott: I would have to verify that. I would think that the bed of the canal would probably not be included, but that any structures along the canal or land which was owned in connection with the canal might be included. I will, however, inform myself upon that point. I may have that information before the committee rises.


Donald Methuen Fleming: I have a further question with respect to section 2 Cc) (iii) which reads as follows:
an improvement to land or structure that is not a building designed for the shelter of people, plant or movable property.
[Mr. Fair.l
We use the word "shelter" rather loosely. I should like to ask the minister if that is intended to include housing.


Douglas Charles Abbott: No, it is not intended to include housing. I think the purpose of this section, as my hon. friend will appreciate, is to include such things, perhaps, as the pergola on the grounds here outside this building, a bandstand in a park and that sort of thing.


Donald Methuen Fleming: The word means shelter from the elements, but does not include housing?


Douglas Charles Abbott: Quite so. If housing is under the Central Mortgage and Housing Corporation it is of course subject to taxes.


Donald Methuen Fleming: Paragraph (e) defines real estate tax as a tax other than a water tax. There are rates on water in municipalities that can hardly be called a tax on water. They are rates paid in return for the purchase of the water supplied, and therefore if the expression "water tax" is intended to include water rates I doubt very much whether this is an accurate expression.


Douglas Charles Abbott: I was endeavouring to turn up what I said about it in the statement that I made in the house on November 14, 1949-I cannot do it readily. But substantially what we do with respect to water rates is this. We pay for water supplied to government buildings. We prefer to do that on a meter basis. If meters are not available we negotiate an arrangement for the actual water service provided.


Donald Methuen Fleming: A straight purchase?


Douglas Charles Abbott: That is a straight purchase. In the definition, the real estate tax is to include the general municipal services other than the provision of water, which in some cases is provided by privately owned public utilities.


Donald Methuen Fleming: If it is the intention of the minister to do that, does he not think there should be a change in the paragraph from water tax to water rates?


Douglas Charles Abbott: We do not make grants in lieu of business tax, water tax or any tax levied on occupants as such.


Stanley Howard Knowles: May I point out that the city from which I come does not include the water rates in the ordinary municipal tax bills as is done down here. But we do have taxes for the construction of, for example, the greater Winnipeg .water district project. It is not a tax for the supply of water, but it is a tax for the building of a municipal improvement. I think the hon. member has something in the suggestion he is making that this wording needs to be looked into.


Douglas Charles Abbott: This has been very carefully considered by the people who have been administering this act over the last year and a half. The essence of my point is that the federal government pays for the water which it receives from the municipalities, either on a meter basis or otherwise, but that it will exclude from the taxes to which this section makes reference any tax so called which is described in the municipal tax bylaw as relating to water.


Stanley Howard Knowles: My point is, if Winnipeg were fortunate enough to qualify under the four per cent formula, which it does not, we would then be faced with the section of the act which would say that we could not take into consideration including what we might get from the federal government for that greater Winnipeg water district tax, which is not a rate for the supply or purchase of water, but a tax for the construction of a municipal improvement.


Douglas Charles Abbott: My hon. friend is quite right, because the construction of the water plant must be amortized out of the price paid for the water, and that would be excluded.


[Stage Direction]
Section agreed to.
On section 3-Two classes of federal property.
Donald Methuen Fleming: The minister should make some further statement as to the way subsection 3 is to be interpreted. Powers are conferred on the minister here, in the determination of what is classed as property, which are very, very broad. They include federal property that accepts from a municipality a service that the municipality customarily furnishes to real property in the municipality and is, in the opinion of the minister, a material service. I would ask the minister to indicate to the committee what is the type of service that is regarded as a material service.


Douglas Charles Abbott: The usual type of municipal service, police, fire and that sort of thing; but the provision and upkeep of roads and sidewalks is not a material service within the meaning of the bill.


Donald Methuen Fleming: It is quite clear that the upkeep of roads and sidewalks is excluded from the definition of service.


Douglas Charles Abbott: That is right.


Donald Methuen Fleming: That is provided by subsection 2, but when we come to class B property we find that it clearly suggests that there are other forms of normal municipal services that are also to be excluded in addition to the
Municipal Grants Act
exclusion of the provision and upkeep of roads and sidewalks. Since the minister is going to be the judge and the interpreter of this section I would ask for a clear statement of what are services that are not material.


Douglas Charles Abbott: Oh, many services; for example, the generally accepted municipal services such as the provision of police protection, fire protection and the other ordinary services which are generally performed by municipalities, garbage collection, and so on, services which are ordinarily performed by municipalities are regarded as material services; but some municipalities give special services to their residents-I think that is probably recognized -which are far from being the general type of municipal service. I do not want to be tied down to them. I do not know exactly what they would be, but the generally accepted municipal services, such as garbage collection, police, fire and so on, are clearly within the definition.


Mr. Graydon:: Schools, too?


Douglas Charles Abbott: Oh, yes. That is a separate heading.


Donald Methuen Fleming: What about things like community halls, day nurseries, supervised playgrounds, and services of that sort, which are well established services in our urban centres? They have been established for a long time and are regarded as normal services.


Douglas Charles Abbott: I should think it would be rather doubtful whether they would be included.


[Stage Direction]
Section agreed to.
On section 4-Grants in respect of federal property.
Stanley Howard Knowles: I may have missed it, but I do not see anywhere in the bill any clause calling for an annual report to parliament. The reason I ask this question in relation to this section is that with respect to this section, as with respect to section 3, we are giving certain powers to the minister. In view of the type of administration carried on, it seems to me that it would be desirable to have an annual report to parliament of the administration of this act. Can the minister say whether or not that was given any thought or whether it was an oversight?


Douglas Charles Abbott: I should think that consideration was given to it, but the report would be in essence the table which I put on Hansard a day or two ago as to the grants paid during the preceding year. This of course will be contained in the public accounts of Canada and in the Department of Finance there will be an item, as there is in the supplementary

Municipal Grants Act
estimates which I will be tabling within a few days, I hope, an item of the cost of administering the municipal grants division. And on that section when we are in committee I will give any further information that may be necessary. It did not seem desirable to go to the additional trouble of drawing a formal report.


Gordon Graydon: During the course of time the minister must have had some representation from the municipalities as to how these grants have been working out under the order in council arrangements of previous days. Has any representation been made by the municipalities to allow the ordinary assessment and taxation procedure which is applicable to private enterprise or ordinary ownership in a municipality to apply to government buildings in this country?


Douglas Charles Abbott: I do not think there has been, because, as I said when this policy was announced, the government would have to reserve to itself the final determination of the valuation. Perhaps I should say that in arriving at that it is the practice of the municipal grants division, which is set up in my department, to have an officer of the division consult with the local assessor, and they discuss the valuation. In some of the larger cities such as Halifax and Ottawa we have retained the services of outside real estate experts to check the valuations and I ;hink I am right in saying that there have oeen no serious differences of opinion with any of the municipalities over the valuations. But the value of government property as carried on most municipal assessment roles was pretty much out of date. No real attention was paid to the properties because they were not paying taxes. Now that we have nearly completed a fairly comprehensive survey I believe we are beginning to get the thing on a fairly even keel. I believe investigations are still going on in some municipalities; for instance, in Halifax there is still some difference of opinion as to certain buildings there. But we are having further checks made. That is the system followed.


Gordon Graydon: In simple terms under this measure, or under the order in council which applied previously, would the dominion government on the average pay as much taxes to a municipality as a similar project or a similar undertaking which was not under government auspices?


Douglas Charles Abbott: Making allowance for the four per cent, which is considered a normal proportion of government properties in a municipality, and taking into account that the formula provides for the payment of only 
75 per cent of the balance, I believe it does. The reason 75 per cent was included is that, among other things, it is recognized that in every municipality there is a very considerable amount of tax-exempt property, in addition to government property. It was felt some recognition must be given to the fact that government property and services do bring benefits to the municipalities. That is why 75 per cent of the excess, rather than 100 per cent, was fixed.


Donald Methuen Fleming: I am concerned about the words "in his discretion". How is this discretion to be exercised? If there are principles to guide the minister, I think he should state them to the house.


Douglas Charles Abbott: I do not wish to take the time of the committee. However, if my learned friend would do me the honour of reading my statement of November 14, 1949, he would see that I set out in detail the principles'- and they are repeated in this bill.


Donald Methuen Fleming: That is just a formula.


Douglas Charles Abbott: But it is essentially an ex gratia payment, and it remains as such. That is why the words "in the discretion of the minister" are put in, namely to preserve the ex gratia principle. But my hon. friend will appreciate that the basis upon which the minister exercises his discretion is the application of the formula set out in the act.


Gordon Graydon: Is there any distinction between a property in which the title is in the crown, and a property of a company operating under its own name, but which is actually a crown company?


Douglas Charles Abbott: This act does not cover crown corporations. As a matter of government policy they have been instructed to negotiate fair and equitable tax agreements with municipalities. For instance I am told that each year the Canadian National Railways pay about $4,500,000 in municipal taxes, and Central Mortgage and Housing Corporation pays something in the order of $2 million,.


Gordon Graydon: The minister says that crown corporations enter into agreements with municipalities. If a crown company decided not to enter into an agreement with a municipality, what would the municipality's position be?


Douglas Charles Abbott: They would not have any taxes.
I dealt with that subject the other afternoon when the hon. member was in a committee. However, crown corporations have been instructed to negotiate tax agreements with municipalities on a fair and equitable basis. As the hon. member probably knows, in many provinces-I am not sure about Ontario-it

is common for large industries to negotiate tax agreements with municipalities. Sometimes those are confirmed by legislation. Crown companies have been instructed to follow a similar practice. Harbour boards,
I know, are negotiating with different municipalities now in connection with taxes on their elevators.


The Deputy Chairman:: May I remind hon. members that we must proceed to the Senate at 5.45 and, unless the bill is passed, we shall have to report progress.


Some hon. Members:: Carried.


Some hon. Members:: No.


Louis-René Beaudoin: Shall section 4 carry?


Donald Methuen Fleming: No.


Louis-René Beaudoin: Mr. Speaker has just indicated to me that we need not interrupt proceedings until we receive the summons from the Gentleman Usher of the Black Rod.


Gordon Graydon: So far as the minister is aware, has there been any complaint by municipalities with respect to assessment and taxes in respect of crown companies in various sections of Canada?


Douglas Charles Abbott: I am not too well informed on that, because crown companies do not come under my jurisdiction. They are under various departments. I do know however that discussions are going on with municipalities to arrive at settlements. But some of those would be under the Department of Transport, others under the Department of Trade and Commerce, and so on.
I anticipate that reasonably satisfactory arrangements will be arrived at in all cases.


Gordon Graydon: It seems to me that sooner or later, because of the increase in the number of crown companies, some definite policy will 'have to be laid down in connection with dealing with crown companies, as in respect of dominion property covered in this bill. While there may not be many serious difficulties at the moment, from time to time we know there have been serious differences of opinion between crown companies and municipalities. That could be normally expected.
It seems to me however that municipalities ought to have some idea of the broad general policy the government proposes to employ in the matter of taxation of companies in which the dominion government has the sole interest. I urge upon the minister that before too much time elapses, now that the trial and error method has been employed from time to time, some definite policy should be laid down in connection
Municipal Grants Act
with these companies. This is due to the municipalities; they should know where they stand in the matter of government policy on this point.


Louis-René Beaudoin: Shall the section carry?


Donald Methuen Fleming: No. As the minister suggested, I shall examine the principles he laid down in his speech of November 14, 1949. Was that a lengthy list of principles?


Douglas Charles Abbott: It was a lengthy statement, but I am afraid I have not the reference in Hansard before me.


Donald Methuen Fleming: Was it a list of principles the minister laid down as a guide to himself in the exercise of this discretion? The mere application of the formula is no answer to the question as to the principles which should guide the minister in the exercise of a discretion under section 4. That is what I am after. This will not be a completely unfettered discretion. It is a discretion which should be exercised according to some established principles.


Douglas Charles Abbott: It is rather difficult to establish a principle in respect of an ex gratia payment, except that if certain conditions are complied with, payment will probably be made.


Donald Methuen Fleming: I do not wish to argue the case with the minister-


Douglas Charles Abbott: I have nothing to add to what I said in my statement of November 14.


Donald Methuen Fleming: I do not wish to argue the point with the minister, but I would point out that when parliament has conferred a discretion on the minister, then parliament is entitled to know definitely on what principles the minister is proceeding in exercising his discretion. The fact that this is an ex gratia payment, and not a payment the municipalities will receive as of right, it seems to me makes it all the more necessary that there should be a statement of principles by which the minister proposes to be guided and bound in exercising his discretion.


Douglas Charles Abbott: I cannot add anything to what I have said.


John Lambert Gibson: Can the Minister of Finance
state on what basis taxes will be paid on the Prime Minister's residence and Rideau Hall?


Douglas Charles Abbott: The Prime Minister's residence would be included in the general formula and the value of the property would be considered. The formula set out in the bill would be applied and it would be lumped together with other government property.

Municipal Grants Act


John Lambert Gibson: There must be some figure
at which the Prime Minister's residence and Rideau Hall are assessed.


Douglas Charles Abbott: That might well be, but I
have not that figure here.


[Stage Direction]
Section agreed to.
On section 5-Grant where class A property exceeds four per cent of aggregate of assessed values and accepted values.
Donald Methuen Fleming: I have in mind property
exempt from ordinary assessment for general rates but liable to local improvement rates, and am wondering if a difficulty is not presented by the definition of taxable property in subsection 2.


Douglas Charles Abbott: Taxable property is defined
in section 2 as meaning real property in respect of which a person may be required by a municipal taxing authority to pay a real estate tax. The term "taxable property" as used here would exclude church and other property which would not be liable for special assessment.


Donald Methuen Fleming: I do not think the minister
has dealt with the real difficulty. In the province of Ontario when we want to make it clear that local improvement rates are not included, we spell it out expressly. I should think that a local improvement rate 's a tax on real estate.


Douglas Charles Abbott: If it is a tax on real estate
then it comes within the definition of taxable property in section 2 (f).


Donald Methuen Fleming: Let us have it clearly understood that you are including in your denominator and also in arriving at the extent of your class A property all property which is exempt from general assessment or general rates but which nevertheless is subject to local improvement rates. As far as Ontario is concerned, that would include practically every class of property, even though as in the case of church property it may be exempt from general assessment.


Douglas Charles Abbott: I am not familiar with the
tax situation in Ontario but taxable property will include property as defined in section 2 (f).
Section stands.
Progress reported.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy Administrator desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.

Accordingly, Mr. Speaker with the house went up to the Senate chamber.
And being returned:
Mr. Speaker informed the house that the Honourable the Deputy of His Excellency the Administrator had been pleased to give, in His Majesty's name, the royal assent to the following bills:
An act to amend the Petition of Right Act.
An act to amend the Juvenile Delinquents Act, 1929.
An act to amend the Prisons and Reformatories Act.
An act respecting Units of Length and Mass.
An act respecting Indians.
An act to amend the Customs Tariff.
An act to incorporate Champion Pipe Line Corporation Limited.
An act to incorporate Independent Pipe Line Company.
An act to amend the Customs Act.
An act respecting Weights and Measures.
An act to incorporate The Baptist Union of Western Canada.
An act to amend The Central Mortgage and Housing Corporation Act.
An act to amend the Criminal Code (race meetings) .
An act to incorporate The Scripture Gift Mission (Canada) Incorporated.
An act to incorporate The Polish National Catholic Church of America in Canada.
An act to amend the Quebec Savings Banks Act.
An act to amend the National Housing Act, 1944.
An act respecting British Columbia Telephone Company.
An act to amend the Excise Tax Act.
At six o'clock the house took recess.

AFTER RECESS

The house resumed at eight o'clock.


[Stage Direction]
The house resumed consideration in committee of Bill No. 390, respecting grants to municipalities-Mr. Abbott-Mr. Dion in the chair.
Section 5 agreed to.
On section 6-Grants in respect of property acquired after December 31, 1948.
Donald Methuen Fleming: I have a question on section 6. Subsection 1 confines the powers granted by this section to cases where federal property has been acquired since December 31, 1948. What is the reason for that limitation?


Douglas Charles Abbott: Because the policy which is contained in this act was announced in November of 1949, and it was decided that it would be made effective for the year then

current; that is, from January 1, 1949, and that it would not be made retroactive behind that date.


Donald Methuen Fleming: Is the position of the minister not sufficiently protected by section 8 of the bill, without confining to cases where the government acquires the property after December 31, 1948, the power granted by section 6 to make grants thereunder?


Douglas Charles Abbott: I think really the intention was to make it perfectly clear that it was not intended to go back of January 1, 1949.


[Stage Direction]
Section agreed to.
Sections 7 and 8 agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the said bill be read the third time?


Some hon. Members:: Now.


Stanley Howard Knowles: By leave.


Douglas Charles Abbott: By leave of the house.


Douglas Charles Abbott: the third reading of the bill.


[Stage Direction]
Motion agreed to, bill read the third time and passed.


Lionel Chevrier: that the house go into committee to consider Bill No. 376, respecting the construction of a line of railway by Canadian National Railway Company from Sherridon to Lynn Lake, in the province of Manitoba (as amended).
Motion agreed to and the house went into committee, Mr. Dion in the chair.
Sections 1 to 8 inclusive agreed to.
On section 9-Fencing.


Howard Charles Green: I believe an amendment to section 9 was moved in the committee on railways, canals and telegraph lines. Have you a note of that amendment, Mr. Chairman?


Lionel Chevrier: My hon. friend is correct in his statement, Mr. Chairman. The words "and station grounds" are to be removed from section 9.


Joseph-Alfred Dion: I have the amendment here. Shall section 9 as amended carry?
Section as amended agreed to.


[Stage Direction]
Title agreed to.
Bill reported, read the third time and passed.
Canadian National Railways


Alphonse Fournier: the second reading of Bill No. 392, respecting Canadian National Railways and to provide for the refunding of matured, maturing and callable financial obligations.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Dion in the chair.
On section 1-Short title.
Donald Methuen Fleming: I have a question with regard to the amount to be financed under this bill in general. As the parliamentary assistant said when he spoke on this matter yesterday, the four previous similar bills in 1935, 1938, 1944-45 and 1947 each provided for the same amount of refunding, namely, $200 million. May I ask him if that power of refunding in the aggregate up to $800 million was fully used up hitherto or is any balance of that amount still available for refunding?


James Sinclair: No, Mr. Chairman. This $200 million is not advanced as a sum. It is authority either to issue bonds up to the amount for the specified period or alternatively for the government to advance funds to the railway until such time as they choose to make a refunding issue. As to the last $200 million, for example, the second table which I put on the record at the resolution stage showed that in this period there have been issues of $151 million made for the four-year period, of which $104,641,528, were for refunding purposes. The other was for capital expenditures under the other bill. On the other hand, if he will look at the first table which I put on the record at the resolution stage, he will see that the total of issues maturing and also issues which could be called in the period under this bill is $216 million. Therefore $200 million is a fairly good estimate of the actual amounts which are maturing and the amounts which may be called in this period.


Donald Methuen Fleming: That does not give me the information I sought, Mr. Chairman. In the four previous bills a total of $800 million has been made available for refunding purposes. How much of that total has been used for that purpose, and how much is still available for the purpose of refunding, and will continue to be available in addition to the $200 million being made available under this bill?
4384	HOUSE OF
Canadian National Railways


James Sinclair: In my answer I gave only a figure for the last issue of the $800 million. I am informed that $22 million is still available of the entire total of $800 million guaranteed.


[Stage Direction]
Section agreed to.
Sections 2 to 5 inclusive agreed to.
On section 6-Cancellation and cremation of original securities.
Stanley Howard Knowles: I notice a word in this section that I confess I have not previously noticed in legislation, namely, the word "cremation". Apparently once these securities are no longer any good, authority is granted for them to be cremated. Why is that word used? Are these like living creatures of some sort? What is done with their ashes?


James Sinclair: They are burned, and the same thing is done with their ashes as is done in the funeral process of cremation, they are scattered; but the word is used in all these statutes for the destruction either of securities or of currency bills. They may be cremated, it being the most secure way of making sure that the actual certificate is destroyed.


Stanley Howard Knowles: Is there any special significance attached to the use of that word? It simply means, I take it, that they are definitely destroyed.


James Sinclair: I think, with the exception of the hon. member, every hon. member in the house knows pretty well what it means.


Donald Methuen Fleming: Total destruction by burning.


[Stage Direction]
Section agreed to.
Section 7 agreed to.
Title agreed to.
Bill reported, read the third time and passed.


Alphonse Fournier: the second reading of Bill No. 393, to authorize the provision of moneys to meet certain capital expenditures made and capital indebtedness incurred by the Canadian National Railways system during the calendar year 1951, and to authorize the guarantee by His Majesty of certain securities to be issued by the Canadian National Railway Company.


Donald Methuen Fleming: Mr. Speaker, there is one comment that should be


made on the principle of this bill in the light of the discussion yesterday, and the very useful and complete information then submitted to the house by the parliamentary assistant to the Minister of Finance (Mr. Sinclair) and the parliamentary assistant to the Minister of Transport (Mr. Benidickson).
The bill, as they have pointed out, follows the pattern of previous bills in relation to C.N.R. financing with the exception of three particulars. The first is the provision of working capital to the extent of $20 million. The second is the authorization to make advance commitments of $111,512,920, and the third is the authorization to use $16,522,000 from reserves for depreciation and debt discount amortization to meet authorized expenditures. One can say, I suppose, Mr. Speaker, that this illustrates the difficulties, when the crown is embarked on a commercial enterprise like the operation of a great railway system, of observing the rules in regard to parliamentary control over finance that we are accustomed to insist upon in the case of financing year by year. It is obvious, I think, Mr. Speaker, that a case has been made out in these particulars in the light of what was said yesterday by the two parliamentary assistants, for the departure from the ordinary practice that no commitments ought to be made in advance of the year in which the sums are to be voted.
The case was made clear yesterday that the company requires an additional $20 million of working capital, and that these commitments are made necessary by reason of the present rather overtaxed condition of the market in which the company must make its purchases of needed equipment.
The third point in regard to the use of the reserves for debt retirement amortization is a perfectly sound principle, in that the government now brings to parliament for approval the application of funds held for this purpose by the railway in order that they may now be applied to the purpose authorized by the bill in other respects; but that there is no possibility now of those being applied without direct parliamentary approval so as to reduce the net amount that would be applied otherwise in the way indicated to make capital expenditures.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Dion in the chair.
Sections 1 and 2 agreed to.

On section 3-Capital expenditures authorized.
James Sinclair: There has been an error in printing clause 3. In the second line of the section which begins:
The national railway system is hereby authorized to make capital expenditures in the calendar year ...	,
The figure 1951 should be inserted. I would ask a minister to move:
That the figure 1951 be inserted after the words "calendar year" in the second line.


Milton Fowler Gregg: I so move.


[Stage Direction]
Amendment agreed to.
Section as amended agreed to.
On section 4-Issue of securities.
Donald Methuen Fleming: Subsection 2 of clause 4 reads:
Amounts available from reserves for depreciation and debt discount amortization may be applied towards meeting the authorized expenditures.
It will be noted that on the righthand side of the sheet, the figure of $16,522,000 is called an estimate of the amount available from reserves for depreciation and debt discount amortization. I noticed that when the parliamentary assistant to the Minister of Finance was speaking on this matter yesterday he said, as recorded at page 4298 of Hansard:
Now, if the committee would like to have on the record the two calculations of the reserve of depreciation and the debt amortization available, I could put them on Hansard very easily. I could read it into the record, although it would be dull, or I could simply place it on Hansard if the committee agrees.
I understand that that information was not placed on Hansard, so that we have not on record the detail of the estimate of this figure. It would be well, Mr. Chairman, to have that figure on Hansard.
Let us bear in mind that it is only an estimate, whereas the effect of this bill would be to make the amount, whatever it may eventually prove to be, entirely available for the purpose of being applied towards meeting authorized expenditures. Will the parliamentary assistant do that? Will he also indicate the date on which this estimate was made and the likelihood there is of any very wide departure from it when the amount is finally ascertained?


James Sinclair: Perhaps it was my fault that this statement which I asked to have included, and which was sent to Hansard, was not included. Actually I did not secure the consent of the house. I should have asked formally for the consent of the house. For that reason Hansard did not include the statement. The statement actually was made by <=0709-2791
Canadian National Railways the railway officials before the railway committee when the budget of the Canadian National Railways was being discussed. I will very gladly read it now if the committee wishes the table and statement which I wanted to put on record. It is as follows: Reserves for depreciation Estimated total 1951 accruals Less estimated charges for retirements, etc	
Estimated 1951 increase in depreciation reserves available for capital expenditures	
Debt discount amortization Estimated amortization charges through Income
Account, year 1951	
Provision for discount which may be suffered on new bond and equipment trust issues in 1951	
Net available for capital expenditures	
Total	 $16,522,000
This sum of $16,522,000 is mentioned in the explanatory note on the righthand side. These funds are available out of revenue. They are funds put aside for depreciation and funds put aside to amortize debt discount. Of course the natural place to invest those funds, on the part of the railways, is in their own securities. That is the provision made there.


Mr. Benidickson:: I might point out that is the same figure as appears at page 136 of the proceedings of the sessional committee on railways and shipping. It was to page 136 that the hon. member for Greenwood was referring in his remarks yesterday on the resolution.


Donald Methuen Fleming: Would one of the parliamentary assistants deal with my second question, which had to do with the date on which that estimate was made, and whether time has advanced sufficiently to enable them to indicate how close that estimate will be to the exact figure, because the bill will authorize the use of whatever sums are in those accounts, regardless of how close they may prove to be to the estimate.


William Moore Benidickson: It is a fairly accurate figure, because it is based on the assets known to be available at the end of the 1950 calendar year; and it takes into account additional assets that will come into the company this year, if this bill passes. The figure is available fairly early in the year for the C.N.R.

$	643,000
273,000

Canadian National Railways 1951 budget, and C.N.R. witnesses have an opportunity to present the budget to the parliamentary committee on railways and shipping. It should be a fairly accurate figure.


John Lambert Gibson: I should like to point out, for the edification of the two parliamentary assistants, that the course bfeing followed by the Canadian National Railways is diametrically opposed to everything that has been suggested by the Department of Finance in respect of private business in Canada. In this instance they are taking $20 million more working capital, and placing very large orders in anticipation of shortages.	[DOT]


James Sinclair: The Department of Finance has never suggested that industry essential to our defence requirements should be curtailed. I cannot think of anything more essential to Canada's defence plans and to Canada's ordinary industrial expansion than to see that we have adequate transportation facilities.


[Stage Direction]
Section agreed to.
Sections 5 to 9 inclusive agreed to.
On section 10-When revenue of Trans-Canada Air Lines and subsidiaries insufficient to meet operating and income charges.
Donald Methuen Fleming: Could the parliamentary assistant to the Minister of Transport refer to page 138 of the report of the committee, and explain the item of $41 million for 1951 in connection with equipment trusts. Who holds the certificates issued under equipment trusts? Are they held by the Minister of Finance?


William Moore Benidickson: No, they are usually financed outside the Department of Finance. That is why in previous years we dealt here only with the net amount. But, as I explained yesterday, it is not anticipated that there will be a good market in the current year for that type of financing. It is expected that the normal securities will have to be provided to the Minister of Finance for the whole cost of equipment and that is why the gross amount is asked for this time in this bill.


[Stage Direction]
Section agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read the third time?


Some hon. Members:: Now.


Stanley Howard Knowles: By leave.


Douglas Charles Abbott: the third reading of the bill.


[Stage Direction]
Motion agreed to, bill read the third time and passed.
Alphonse Fournier: that the house go into committee of supply.



HEALTH INSURANCE


Stanley Howard Knowles: Mr. Speaker, before you leave the chair I should like to speak for a few moments on a matter which arose when we were on the orders of the day this morning. I do so because I was astounded at the answer the Prime Minister (Mr. St. Laurent) gave to a question put to him by the hon. member for Rosedale (Mr. Henry). I was still more startled by the answer he gave to a supplementary question of mine with reference to the same subject.
The hon. member for Rosedale asked the Prime Minister if the government had given or would give consideration to government participation in proposals recently put forward by the Canadian Medical Association, with reference to prepaid medical care. In his answer the Prime Minister indicated that the hon. member for Rosedale had sent him a number of newspaper clippings to make clear the import of the question he asked. The Prime Minister said it was quite clear from those clippings that what was proposed by the medical association was that they should make use of their autonomous powers within the provinces to organize and administer a scheme of prepaid medical care. To my amazement the Prime Minister said that he, as an individual, and other members of the cabinet as individuals were greatly interested in these proposals and welcomed them as further evidence of the concern of the medical profession to increase the efficiency and the scope of their assistance to their fellow Canadians, acting in the role of good Samaritans.
As he went on to answer that question, and indeed in his answer to my question, he made it clear-although I must say in all fairness he was speaking somewhat off the cuff in his answer to my question-that he actually welcomed the idea of a form of health insurance being administered, not by the government but by the medical profession under its own autonomous powers.
I confess this attitude struck me as a case of the Prime Minister's backing away from declared Liberal proposals with regard to health insurance, and I felt it might be well to ask him at that time if consideration would be given at the next session of parliament to the setting up of a special committee to go into this whole question.

The Prime Minister replied to that by repeating the sort of statement he had made to the hon. member for Rosedale, and concluded with these words, which I noted:
I think that it would be a most happy solution if the medical profession would assume the administration of some plan that would be responsible for providing prepaid medical attendance to any Canadian who needed it.
I did not mind the Prime Minister congratulating the medical profession on any evidence of social responsibility that they may give, but I suggest that entirely apart from the views that we in this party hold, the Liberal party is already committed, and has been across the years, to the proposition that if we are going to have a proper program of health insurance it must be administered in the name of all the people by their government.
I just said that the Liberal party has been committed to that principle across the years. I shall go all the way back to 1919. I hold in my hand a copy of the report of the national convention of the Liberal party- this is the convention before the last one- held in Ottawa on August 5, 6 and 7, 1919. I find that the hon. gentleman who was later at that convention elected the leader of the Liberal party was speaking to a lengthy resolution on labour and industrial conditions. There were a number of subdivisions and Mr. Mackenzie King was speaking in support of the propositions set out in that resolution. I quote from page 127 of this official report:
That in so far as may be practicable, having regard for Canada's financial position, an adequate system of insurance against unemployment, sickness, dependence in old age, and other disability, which would include old age pensions, widows' pensions, and maternity benefits, should be instituted by the federal government in conjunction with the governments of the several provinces; and that on matters pertaining to industrial and social legislation an effort should be made to overcome any question of jurisdiction between the dominion and the provinces by effective co-operation between the several governments.
I well remember reminding Mr. King of the support he had given away back in 1919 to the principle of health insurance. In 1948 when Mr. King announced in this house the health grants program which is now in effect -a program only one-fifth of what the federal government proposed to the provinces in 1945-he himself went back and referred to that resolution of 1919 as a piece of unfinished business, something that he and the Liberal party had been committed to since 1919.
I jump across the years to the next Liberal convention, the one held in Ottawa in 1948. I have in my hand two pieces of evidence with respect to that convention. One is a copy of the Ottawa Citizen of Monday, August 9, 1948,
Health Insurance
in which are listed the twenty-one planks of the new platform adopted by the Liberal party at that convention. Plank 11 reads:
A comprehensive social security program.
I have also obtained a copy of the resolutions adopted at that convention in which resolution No. 11 relating to social security is spelled out as follows:
The Liberal party stands for a national program of social security in collaboration with federal and provincial governments with the following objectives: useful employment for all who are willing to work, standards of nutrition and housing adequate to ensure the health of the whole population; social insurance against privation resulting from unemployment, from disability, from ill health and from old age.
The program will include a steady extension of insurance on a contributory basis to protect all citizens from a temporary loss of income and to provide for their old age; health insurance covering medical, dental, surgical and hospital health services on a contributory basis; more equal care and opportunity for all children through family allowances; and pensions for the blind.
It will be noted that there was nothing in that plank adopted at the convention here in Ottawa in 1948 suggesting that the Liberal party would be satisfied with a program of prepaid medical care administered apart from the government by the medical association. The Liberal party reaffirmed the position taken by Mr. King in 1919 calling for a government program of adequate health insurance.
That was the declared policy of the Liberal party, declared in 1919 and reaffirmed in 1948. Its newly elected leader, the present Prime Minister, made a number of speeches during the year that followed the adoption of that new platform. Some of them were collected in the Canadian Liberal, a quarterly publication put out by the Liberal party. I hold in my hand the issue for the fall of 1949 and I And on pages 20, 21 and 22 a report of a national broadcast made on December 16, 1948, by the Prime Minister. From that speech I wish to quote one paragraph:
As for health insurance, the Liberal party has repeatedly said the federal government should help with a sensible and practical nationwide scheme whenever the provincial governments can reach a satisfactory agreement for dominion-provincial co-operation.
It is true that the Liberal party and the government keep talking of this in terms of dominion-provincial co-operation, and with that I agree. However, there is no suggestion anywhere in any literature of the Liberal party that this should be done apart from the government, that it should be administered by the Canadian Medical Association. The position of the Liberal party is clear. It

Health Insurance
believes in health insurance administered by the government, with emphasis upon dominion-provincial co-operation.
I am not taking time to state our C.C.F. position. This house and the country know that we have stood across the years for an over-all social security program, including a comprehensive program of health insurance administered in the name of the people by the government. We were pleased to discover in years gone by that the Liberal party seemed to be moving that way. I recall piling a number of reports up on my desk during another speech earlier this session which indicated the attention that had been given by parliament at the direction of the government to this question of health insurance. But the government seems to be backing away from this whole policy which it has adopted in black and white.
Last year in the special committee on old age security other matters that were not included in our terms of reference came up repeatedly. I think members of that committee will bear me out when I say that it was our feeling that at the earliest possible opportunity there should be established another committee similar to the one we had last year to do a job on this question of health insurance. But this year my questions to the Minister of National Health and Welfare (Mr. Martin) requesting that such a committee be set up were met with a point-blank "No" on at least two occasions.
Again this morning the Prime Minister simply brushed off my question by expressing satisfaction with the plan proposed by the Canadian Medical Association. I submit that this is an extremely important matter and I think those in this house who should be most concerned about the statement made this morning by the Prime Minister are the members of the Liberal party. The Liberals seem to take the view-


Mr. MacDougall:: Let us worry about that.


Stanley Howard Knowles: I am not only letting the
Liberals worry about it, I am encouraging them to worry about it. I hope they will bring it up in a place where it may do some good.


An hon. Member:: Not in Winnipeg North Centre.


Stanley Howard Knowles: There are certain by-elections taking place just now-


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: -and I have heard the Minister of National Health and Welfare speak in the glowing terms that he alone can use about what this government has

done in the field of social security. I think particularly of a broadcast that I heard in Winnipeg two nights ago to the effect that we have social security; this is it; in other words there is to be no more. I submit that what the Prime Minister said this morning confirms that attitude, and what the Minister of National Health and Welfare said to me on at least two occasions this year also confirms that attitude. They seem to feel that because a fairly good report on old age security was made by the committee last year, which is now in process of being implemented, there is no need for us to concern ourselves about other measures of social security for a long time to come. That attitude is wholly wrong. I submit that just as Mr. Mackenzie King was concerned about this matter away back in 1919, just as the Liberal party reaffirmed its position in 1948, it is a matter of such serious consequence that the members of the Liberal party should read the answers which were given this morning and do their best within their own party councils to see to it that their party sticks to its declared policy of health insurance administered not by the medical profession but by the various levels of government in the interests of the people as a whole. Furthermore, I hope we will soon get a special committee to go into this very important question.
Motion agreed to and the house went into committee, Mr. Dion in the chair.



PRIVY COUNCIL OFFICE

[Stage Direction]
322. General administration, $205,586.
Item stands.
DEPARTMENT OF FINANCE General administration-[DOT]
112. Departmental administration, $1,505,769.
Mr. Stanfield:: Are the minister and his
department thinking of taking any steps to support the price of dominion government bonds? I realize that there are many difficulties in the way of doing so, but at the same time many people when they bought those bonds were told that they could always get 100 cents on the dollar for them. I realize also that if they hold them to maturity they will get 100 cents on the dollar, but not everyone is able to hold his bonds. There are many small investors who for some reason or other find it necessary to sell $100 or $500 or $5,000 of their bonds. When they go to the bank and find the bond quoted at 96 or 97 or perhaps 98, they immediately wonder why they cannot get par for it. In fairness to those people who were told that Canadian government

Supply-Finance
bonds would always be worth 100 cents on to these bonds. Having established that the dollar I believe those who have to turn principle I should not think the minister is in their bonds for one reason or another in quite as good a position to back away as should be able to get their face value.	he seems to think he is.


Douglas Charles Abbott: I dealt with this matter the other day in another connection. As far as Canadian government bonds are concerned, of course the government never gave any assurance to any purchaser that he would receive 100 cents on the dollar at any period of time other than maturity. The contract calls for payment of the face value of the bond at maturity and payment of the specified interest in the meantime. In the case of Canada savings bonds, they can be cashed at any time for face value plus accrued interest. Long term government bonds vary according to market conditions. Some of the victory bonds sold at substantial premiums, some as high as 105. At the moment, as I explained the other day, interest rates generally have increased, and the day to day price of government bonds is of course determined by the prevailing interest rate.
I do not know that I can add anything further. The government invests in bonds through various funds such as the unemployment insurance fund; the Bank of Canada invests in government bonds, but they are purchased at prevailing market prices. I repeat that the government never gave any undertaking except that an orderly and stable market would be provided for these bonds.


Frank Thomas Stanfield: The government may not
have given an undertaking, but when a great many people bought victory bonds they were given the assurance by those selling them and by the banks in general that they would always be honoured at 100 cents on the dollar.


Douglas Charles Abbott: They will, in accordance with the terms of the bond.


Frank Thomas Stanfield: I think they should be so
honoured now.


Douglas Charles Abbott: No government I know of
issues a long-term obligation with a relatively high interest rate and guarantees the face value at any time. You cannot have absolute security, absolute liquidity and a high interest rate all at the same time.


Gordon Graydon: Surely the minister does
not suggest the government has not given some support to these bonds in order to keep them up to where they have been. It is one thing for the government to say now that they did not give any guarantee the bonds would always sell at par, but the minister will hardly tell the committee that the government has not given some support


Douglas Charles Abbott: It all depends on what my
hon. friend means by support. The government has been a purchaser and seller of government bonds in line with prevailing interest rates, but it has never attempted to maintain an artificial support for government bonds.


Gordon Graydon: None?


Frank Thomas Stanfield: Oh, yes, you did.


Gordon Graydon: There will be wide disagreement with that statement.


Mr. Maclnnis:: I suppose the minister is quite right when he asserts that the government never gave any undertaking that the bonds would always remain at par. It was always understood, of course, that if the bonds were kept to maturity they could be cashed for their face value. But I do not believe that is the whole story, or that the case of the ordinary person who bought these bonds is put in quite the right light. It is quite possible that when people were going around selling the bonds they may have given the assurance that the bond could always be sold at par, though I never heard that assurance given; but we must remember that many of those who bought victory bonds during the war were not people who usually buy and sell bonds of that kind. They were people who really did not know anything about bonds, who perhaps had never had a bond before. They bought these bonds because the government pointed out that it was desirable to save, that it was necessary to do so in order to win that war, and all that sort of thing.
Today the person who bought $100 or $500 worth of these bonds sees those bonds being depreciated on the market. Perhaps that does not make very much difference to him, but in addition those bonds are depreciating every day in their purchasing value as prices rise, so the purchaser is being caught both ways. He is being caught with a bond which is depreciating in market value, and with a bond the money value of which is depreciating so fast that neither interest nor anything of that kind can keep up with it. I really think the government should do something, because it is the little fellow who does not specialize in the buying and selling of these bonds who is taking the rap, as it were. He is being disillusioned as to the stability of the world about him, and his mind is being prepared for any kind of disruptive philosophy that may be put forward. I do not know if the minister or the members of the cabinet

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understand the harm that is being done to the minds of people because of what is happening today.


Solon Earl Low: I was very much interested in
what the minister had to say about the withdrawal of support on the market. I thought he indicated to the committee that the government or the Bank of Canada, whichever one it is that has been maintaining the support on the market to keep the price of bonds fairly stable at or just about par, withdrew its support. Is it not true that action was taken to withdraw the support about two years ago as a means of establishing a new interest rate, perhaps the first step in a deflationary program?


Douglas Charles Abbott: No; speaking from memory I think the change in interest rates on government bonds followed the increase in interest rates on long-term government bonds in the United States, which was within the last six or seven months. I remember our last issue of bonds, which was a little less than a year ago, was made at approximately 2f per cent, which reflected nearly the lowest interest rate we had had in the post-war period.
Subsequent to that, as my hon. friend will recall, there was an increase in the longterm interest rate in the United States, following a long wrangle between the treasury and the federal reserve. At or about that time interest rates in Canada on long-term government bonds moved up pretty much in line with the movement and the price which the government of the United States offered for government bonds, and which presumably the Bank of Canada was prepared to pay.


Solon Earl Low: About two years ago, I think it was in the spring of 1949, did not the Bank of Canada announce that it was withdrawing its support?


Douglas Charles Abbott: I think what the hon. member has in mind is that about two years ago the Bank of Canada ceased issuing a daily quotation for government bonds.


Solon Earl Low: That is right, and since that time they have gradually withdrawn their support of the daily market?


Douglas Charles Abbott: I would not be prepared to say that. There is a difference between publishing a daily price which the bank would be prepared to pay for bonds, and simply allowing the normal processes of the market to operate, and the bank purchasing whatever bonds it wished in that market.


Solon Earl Low: Is it not true that the bank did not buy any bonds, at least all the bonds, which were offered to it at certain rates? It runs in my mind that the whole trend has been to allow the price to decline in order

to bolster interest rates generally. That being the case, Mr. Chairman, I am just wondering if the minister and his department have been closing their eyes to this. Not only do people feel that they were guaranteed, in some respects at any rate, one hundred cents on the dollar when they bought those bonds, but they are now coming to realize that if they bought the bonds some years ago they paid dollars that were worth one hundred cents. Those who are forced to sell their bonds now are forced to accept a dollar which will only buy 53 or 54 cents in terms of the dollar of 1935-39. That is a serious thing for bondholders. It is going to make it very difficult for governments to finance the sale of bonds in the future unless something is done to treat the bondholder properly.
It seems to me that that sort of thing is destroying the faith of the people in government. One of two things can be done to restore that faith. The first one is that the government can take steps to restore the value of the Canadian dollar and to stabilize more or less at a uniform level over the years. It seems to me that is one of the responsibilities of government. To put cents back into the Canadian dollar seems to me to be a very important responsibility of government. The second alternative would be to have the Bank of Canada support the price of bonds in the market so that if people need to dispose of their bonds at any time they will be able to get one hundred cents on the dollar. Is that not one of the government's responsibilities?


Douglas Charles Abbott: I must confess that I do not believe, and have never believed, that a government, by governmental action alone, could maintain a stable purchasing power for its unit of currency. Inflation is a most unfortunate phenomenon. I agree with the member for Vancouver East that it is extremely unfortunate that since the end of the war, but really as a result of what happened during the war, we have sustained a substantial measure of inflation. The government is doing what it can or what it believes is possible to check these forces. One of the weapons being used is to permit a mild increase in the interest rates. So far as we are concerned, under the system under which we operate, I do not believe it is possible to control absolutely the internal purchasing power of our unit of currency. We might if we had the Russian system, but without adopting a completely authoritarian system and shutting ourselves off from the rest of the world, I do not believe that is possible.


John Lambert Gibson: I wonder if the minister would state whether there is any reason why the holders of these bonds should not be able to

go to a bank and obtain a loan of up to ninety per cent of the face value of the bond? Have any instructions been issued by the government which would militate against obtaining loans of that kind?


Douglas Charles Abbott: No, the government has not issued any instructions to banks in connection with credit. As I explained before, the banks were asked by the Bank of Canada to endeavour to maintain the over-all level of their credit at approximately what it was at the end of the year. They have not been able to achieve that, for reasons which are no doubt good and sufficient. So far as I am aware the banks are prepared to lend on government bonds within proper limits, and I have no doubt they are doing so.


Frank Thomas Stanfield: I should like to point out to the minister that a lot of people borrowed money from the banks at that time to buy those bonds. They were encouraged to buy the bond and they borrowed from the bank or anyone at all. They always thought they could get 100 cents on the dollar for them. I do not believe it is fair now when people have to turn in a $100 bond they only get $96. I believe they should be given a 3J per cent bond in exchange for their present bond so they would get 100 cents on the dollar. It is not right for the government to allow the people to take a depreciation on their bonds. I do not think it is good faith or good business.


Mr. Wright:: When these bonds were being sold in 1943 I raised with the then minister of finance, Mr. Ilsley, the question of whether or not these bonds could be guaranteed at par. At that time he stated it was impossible for the government to give that guarantee, but he said it would be the policy of the government to maintain that price as close to par as possible. He also said it was unthinkable -I think those were the words he used-that there should be any very great depreciation so far as the value of these bonds was concerned. I do not suppose the present minister thinks that $2 or $3 depreciation is any very great depreciation. But that depreciation has come about as a direct result of the action of this government.


Douglas Charles Abbott: No, it has not.


Percy Ellis Wright: It certainly has.


Douglas Charles Abbott: My hon. friend is completely wrong.


Percy Ellis Wright: The government has, through the Bank of Canada, instituted a policy of a higher interest rate which has the result of lowering the price or value of these bonds. There is no doubt about that. The minister himself stated that.
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Douglas Charles Abbott: The Bank of Canada was simply recognizing what had taken place elsewhere.


Percy Ellis Wright: It was the policy of this government.


Douglas Charles Abbott: That may be all right for a by-election in Saskatchewan, but it does not mean much to me.


Percy Ellis Wright: The minister has stated it himself in this chamber. Certainly these bonds were sold to people, and they have depreciated in value. One of the reasons why the minister wants a higher interest rate in this country is to stop inflation. Perhaps by stopping inflation he may in the long run increase the purchasing value of the dollar, and the man who has these bonds may be better off than he would be by selling them at 97, provided the cost of living goes down as a result of this action. But the cost of living has not gone down to date as a result of the action of the government. The cost of living is continuing t- rise; and not only is the man who purchased these bonds losing in the value of the dollar if he cashes them, but he is losing in the value on the bonds themselves.


Douglas Charles Abbott: Not unless he sells them.


Percy Ellis Wright: Certainly not unless he has to sell them. But in many cases if he is to continue to give his family a decent standard of living today, he has got to sell those bonds. Certainly if he wants to purchase any amount of goods or if he wants to extend his business, if he has bonds the only way he can extend his business or the only way he can purchase these goods is, in many cases, by selling those bonds. The people who buy them are certainly guaranteed, as the minister says, one hundred cents on the dollar.
I can remember quite well what happened to these bonds after the first war. They went down to about 85 cents or 87 cents on the dollar. Many of us who had sent home the bit of savings that we had during the war and purchased those bonds came back to Canada and had to sell the bonds for 85 cents on the dollar. The banks or the institutions that purchased them obtained 100 cents on the dollar, and 5 per cent on them as well. To a lesser extent the same thing is taking place right today. I say again that it is the policy of this government, through its action through the Bank of Canada in increasing interest rates, that has depreciated the value of these bonds.


Mr. Quelch:: Mr. Chairman, I should like to ask the minister a question regarding the effects of their anti-inflationary policy. We all realize that there is a great change in the economic picture in Canada since June of

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last year. Prior to that time everybody was worried about the possibility of a depression. The Minister of Resources and Development was warning that unless people started to spend their money more freely we were likely to have a depression. He made such a speech before the advertising club in Toronto. The situation is completely different now as a result of the war in Korea. Defence expenditures are competing with private demand for goods. There is a certain amount of what you might call war mentality among the people. They are afraid that goods are going to become scarce so they try to buy in advance in order to make sure that they will get them before they disappear from the market. In addition to that, the kind of talk that is being carried on by several ministers of the government with regard to the fact that we are not having price control today but we may have it in the near future, I think caused many industries to try to jump the gun and raise prices in anticipation that price control might be brought in. I think all that added to the inflationary pressure within the country.
The government's policies today are for the purpose of trying to counteract that inflationary trend. They brought in credit restrictions, and one of the effects has been that car industries are laying off men. I think the minister will agree with me that one thing that we cannot afford today is to have idle men and idle machines. It is bad to have inflation; that is true. But the greatest evil today is idle men and idle machines. The world today needs the greatest production that the countries of the world are capable of carrying out. The minister must admit that the laying off of men in the car industry is a direct result of the government's policy in restricting credit.


Douglas Charles Abbott: I would not admit that. I would say that it is a bit of anticipation of demand.


Victor Quelch: The minister said there was-


Douglas Charles Abbott: When you sell 50,000 units in one month, that is a great many units.


Victor Quelch: The minister has suggested that there was overproduction; yet I waited three months to get a car. There did not seem to be overproduction.


Douglas Charles Abbott: You can easily get one now.


Victor Quelch: Exactly; because the car industries are claiming that as a result of the credit restrictions they cannot sell their cars. They claim that if the restrictions were removed, they would immediately be able to sell them.


Douglas Charles Abbott: They may use that as an excuse.
IMr. Quelch.]


Victor Quelch: Apart altogether from the reason, the point we*must keep in mind is that today we have idle men and idle machines in certain parts of this country. Many people fear that situation will increase. The question is this: What are we going to do about it? I thought that part of the idea behind the government's policy was to try to curtail demand for goods utilizing a large percentage of steel, as steel is needed for war purposes. It seemed to me that perhaps the government had sort of jumped the gun and that they had started to curtail demand before defence expenditures were such as to take up that slack. I think the Minister of Trade and Commerce pointed out that large orders for defence would perhaps be placed with some of these car industries in the near future. But in the meantime these men and these machines are idle. I think that is a point that the minister should be able to give some assurance on. Are we going to see in other industries a repetition of what is happening in the motorcar industry? I am sure the minister will agree that it would be a most deplorable situation if, at a time like this, there continued to be idle men and idle machines. We must have an increase in production. The best way to combat inflation is to expand our production. Can the minister give any assurance that that slack will be taken up?


Douglas Charles Abbott: I quite agree with my hon. friend that it is most undesirable that we should have idle men and idle machines. But to take the specific case that he mentions, namely the automobile industry, and as to the lay-off of a week or ten days, or even if it were longer, I am led to believe that there are other fields of endeavour in Canada in which these men could be rapidly utilized.
It is not absolutely essential that we go on, month after month, producing an increasing number of motorcars. There are a great many other things that are needed, and that are not entirely related to defence. For instance, in the month of March almost
50,000	new motor vehicles were delivered through retail channels. By all accounts that was an all-time high, as compared with the same month of last year, when the figure was about 35,000; and that in turn was much higher than the year before. In April the figure was almost 47,000; I have not yet the figures for May. But I believe that motorcars have been turned out rather more rapidly than the community is perhaps able to absorb them. It may need a little bit of averaging for a few months.

But on the general point raised by my hon. friend, we should of course do everything possible to utilize all our men and machines. But the government policy at the moment is intended' to try to utilize the price system to some extent to achieve that redistribution of labour.


Solon Earl Low: I have often wanted to have the minister get into a real fundamental debate on his financial policy. On various occasions since 1945 we have asked the minister to bring forward his estimates early in the session so that we could get down to just such a debate, because there are a great many things that I should like to know and that I am sure that other hon. members would like to find out. However, here we are again on the home-stretch and we are just now getting these estimates before us. I see some hope, however, of getting such a full-dress debate because on the order paper there is a motion-I think it is No. 22 on today's order paper-that in committee of the whole a certain resolution will be moved for the introduction of a measure to consolidate and revise the Department of Finance and Treasury Board Act and so on. I said to some of my colleagues just a few days ago, when I saw this motion on the order paper, that I felt that this would perhaps offer the very finest opportunity for a full-dress debate on the financial policy of this government. Since it is possible that this bill will come forward at some time in the near future, perhaps in the fall session, if not earlier, we think that we should take advantage of it, and I should like to serve notice on the Minister of Finance that that is when we intend to usher in a full-dress debate. We would like him to be prepared and get his armour on.


Douglas Charles Abbott: I will be ready.


Solon Earl Low: I am glad to have him accept, because there are a good many things that we have brought forward over the years, which, while they have not been successfully denied, have not been admitted, and I should like to have some of these things admitted by the government or to have it shown where we are wrong.
However, there is one thing I should like to have the minister do tonight. I wish the minister would take just a few minutes to tell the committee what part the Bank of Canada plays in the formulation of his financial policy. I should like to get clear in my mind just who sets the policy. Is it the Bank of Canada? Is it the treasury? Is it the treasury and the Bank of Canada combined, or what? If the minister would oblige us- I do not ask him for a long detailed exposition-with at least something to help me to
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get my thinking straight on this whole matter, I should appreciate it.


Douglas Charles Abbott: The responsibilities of the Bank of Canada of course, as my hon. friend is well aware, are set out in the Bank of Canada Act. It is a corporation which is independent of the government as such. The government owns all the shares of the Bank of Canada and is entitled to the profits, after certain reserves have been established. Under the Bank of Canada Act the governor and the directors of the bank are given specific statutory responsibilities with respect to the issue of currency, and among their responsibilities is to do what is possible within their sphere to maintain the integrity of the currency.
Naturally the governor of the Bank of Canada, the Minister of Finance and his permanent officials operate in very close consultation, and the relationships are very close. The Bank of Canada has certain defined statutory responsibilities which, under the statute creating it, it is obliged to carry out. The government has other responsibilities, and among other things I suppose government policy can inevitably affect the value of currency, and to that extent could negative action which the bank might attempt to take. Frankly, I did not come prepared this evening to engage in detailed analysis of the relative relationships between the Bank of Canada and the government. I have not the Bank of Canada Act here, but broadly speaking they are parallel responsibilities. The government, of course, if it were not satisfied with the action taken by the governor and the directors of the Bank of Canada, would have to change the management of the bank.


Solon Earl Low: Yes.


Douglas Charles Abbott: So that I suppose it is fair to assume that the ultimate responsibility must fall upon the government.


Solon Earl Low: That is the point that I am glad to have. The minister says that he did not come prepared tonight to go into detail with respect to the relative responsibility, and so on, of the treasury and the Bank of Canada. I would like to serve notice on the minister that we would like to go into that in fair detail at a time when it is propitious to do so.
There is one thing further that I should like to have the minister discuss just briefly before the committee. I think he has said on a number of occasions in this committee that he felt the Bank of Canada could quite successfully control the credit policy of the country so as to prevent any undue inflationary effect of the issue of credit. I believe that one of his anti-inflationary measures was

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to advise the chartered banks, through the Bank of Canada, to begin some curtailment of credit. I think that has been done. The policy is now in effect. I have discussed it briefly with bank managers, and they say that while the order, or the advice, if you want to put it that way, from the Bank of Canada is causing them no end of grief because of necessity for sending to headquarters a great many applications for loans that may extend over let us say twelve months, yet it is working to some extent. If we do grant that the Bank of Canada has some effective control of the amount of credit which the chartered banks can issue, and thus may have some sort of braking effect upon inflationary tendencies, at a time like this, the question that I would like to ask the minister is this: If the reverse situation came about, that is, if we ran into a period where the surpluses of goods in the hands of producers and distributors throughout the country become such as to bring about a threatened period of unemployment and recession, will the minister tell us what mechanism the Bank of Canada has to see that we do not get into a period of disastrous recession or depression.


Douglas Charles Abbott: My hon. friend has asked me what the Bank of Canada should do under these circumstances. As he pointed out, following consultation with the chartered banks, the Bank of Canada felt that economic conditions were such that the chartered banks would be well advised to curtail any further expansion of credit, and I think that by and large the banks are beginning to achieve that end.


Solon Earl Low: They are.


Douglas Charles Abbott: If conditions were somewhat
the reverse of what they are today and the deflationary forces were paramount, then I have no doubt that the governor of the Bank of Canada, and the officials of the Bank of Canada as competent technicians in this field, would discuss with the chartered banks and would suggest to them that under these conditions-they would encourage them, shall I put it this way, to pursue a more expansionist policy. These things are all in the exercise of judgment on the part of those who have to make these decisions.


Solon Earl Low: I think that is put very well.
But the minister knows that when surpluses begin to appear and we face possible deflationary conditions confidence is lost very rapidly. It is easy to put a brake on the issue of credit, but does the minister feel that there is a sufficiently strong mechanism closely enough integrated with his own

department's control so that they could prevent a serious loss of confidence and bring things back to a level of economic stability?


Douglas Charles Abbott: I will answer my hon. friend in this way. I think today we have organizations, knowledge and techniques in this field which we did not possess in that unfortunate period from 1930 to 1935 or 1936. We have a central bank. We have a central bank now with considerable experience. We have a central bank with management in which I for one have the greatest confidence; and while, as I say, these questions are all matters of judgment in the use of these weapons, they are pretty blunt weapons. I agree that when deflation sets in deflationary forces are created rather easily, and then confidence is lost. But that is where the exercise of judgment comes in. One must be sure that one does not push either on the contraction side or on the expansion side too strongly.


John Sylvester Aloysius Sinnott: I hear some of my colleagues condemning me for saying a few words; but this is a very important matter and I think it should be discussed thoroughly.


An hon. Member:: By you.


John Sylvester Aloysius Sinnott: I agree with the minister
when he put his curtailment of credit on cars. In the long run I think the majority of Canadians will benefit a lot from it. If this policy of easy credit were to go on those who want to purchase cars now but have only small down payments would have to go to those financial institutions charging 12 or 14 per cent for the balance of the money. The financial institutions would be the ones who would benefit. With the policy of the government today credit controls will be effective until purchasers of cars have enough money for a down payment.
The hon. member for Peace River has raised the matter of municipal financing. It was only this afternoon that the hon. member for Comox-Alberni referred to my municipality of Brokenhead.
Well, I have had some experience along these lines, and I should like to pass on that experience. During my term of office in the municipality which, after ten years, I still have the honour to represent, there were changes in the debt position. When I took office we had a debt of $366,000. After a period of ten years of good financing we do not owe a dollar to anybody.
I notice according to the public accounts that in 1867 at the time of confederation Canada had a national debt of $75,728,641. We operated at a deficit for the first four years. In the fifth year there was a net decrease in public expenditures so that the

national debt was reduced by $503,224. Then for some years we were in the red. But later, in 1881, there was surplus of $1,734,000. They went on for ten years with a deficit every year until the year 1900, when there was a small surplus of $779,000.


George James McIlraith: That was under a Liberal
government again.


John Sylvester Aloysius Sinnott: I am not talking about
Liberals or Conservatives, because I am going to advocate a national policy to reduce Canada's national debt to nil. Then we come down to 1914 when, at the time of the first great war, we had a deficit, and that continued for ten years. After the war was over there was a decrease in the national debt for a period of seven years, which was followed by a period of deficits.
I agree wholeheartedly with the Minister of Finance in the policy he has followed in the last four years. This year while we have very large expenditures to take care of war requirements we are still able to finance those requirements and have money left in the coffers for a reduction in Canada's national debt. I am not saying that it is either good or bad when either of the major political parties is in office; but I do say that with a definite policy for twenty years we would not need to levy one cent more than we are levying right now, with our heavy war expenditures. With an amount of $782 million a year plus interest for a period of twenty years Canada's national debt would be reduced to nothing. I trust the opposition will keep in mind that the surpluses we have had in the last few years, and for which they have criticized the government, are to be used to reduce Canada's national debt, and they have done so to a considerable extent. I would hope that in the next twenty years, whether the Liberal party is in office or not, Canada's national debt would be reduced so that the money we are using to pay interest charges could be used for other social purposes.


Victor Quelch: I would ask the Minister of Finance whether there has been any change in attitude on his part regarding the effect of financing through the Bank of Canada. He will recall that in the depression years we advocated that the government use the Bank of Canada to finance public works so as to provide employment. That was at a time of large-scale unemployment. The argument his predecessor used, and one which he himself has used, was that if that were done and the money issued reached the chartered banks they would then be in a position to expand their loans ten to one, and thus cause inflation.
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I notice however that the officials of the Bank of Canada have never agreed with that statement of the minister or his predecessor. They take the stand that just because money was issued would not necessarily mean that the chartered banks would expand their loans ten to one, because all that would be necessary would be for the Bank of Canada to advise the chartered banks that they did not want them to expand their loans, and that in this way it would not be done. In other words, the Bank of Canada believes there is sufficiently close co-operation between themselves and the chartered banks to avoid action of that kind.
I wish to assure the minister than I am not at this time advocating the use of the Bank of Canada, because this is an entirely different situation. But in case that situation does develop, and in case war develops and we find ourselves in a position where, in spite of heavy taxation and heavy borrowing from the people's savings, we still have to have a degree of monetary expansion, as we did in the last war, it might be wise and, in my opinion, would be wise, to use the Bank of Canada rather than the chartered banks. I was wondering if the minister would agree that in that case there is a sufficiently close co-operation between the Bank of Canada and the chartered banks to assure that if we did finance to a certain extent through the Bank of Canada rather than through the chartered banks it could be done without expanding the amount of money issued by ten to one.


Douglas Charles Abbott: I should not like to commit myself to agreeing completely with the hon. member on the point. As he has indicated, I have had occasion to discuss it at another time. It is a complex and technical matter. The relationship between the Bank of Canada and the chartered banks might be very close; but if the expanded currency credit by the Bank of Canada were to get into the hands of the chartered banks and could not be used by them I would think it would be extremely difficult to prevent their expanding in approximately the ratio he has suggested. However, I do not think it is wise to be too dogmatic in these matters. If a condition such as he suggests were to develop again I have no doubt that, as was the case in 1939, some moderate expansion might not only be necessary but might well be desirable.


Solon Earl Low: Through the Bank of Canada?


Douglas Charles Abbott: Well, it was done that way.


Donald Methuen Fleming: I believe my observations might apply to either item 112 or 113. On more than one occasion the minister has made a good deal of the government's efforts,

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so called, to reduce expenditures. One would have expected that, with that policy originating in the Department of Finance, there would have been reductions in the expenditures of that department, and that it would have led the way. I notice that the two items under the heading of general administration total this year $13,590,710, whereas last year they were only $12,758,245, or an increase of $832,465. I realize, of course, there has been an increase in salaries paid to civil servants, and those increases were accepted by all members as timely and well warranted. But I was wondering why we do not find in the estimates of this department any perceptible decrease in expenditure.
We listened with interest to the observations of the hon. member for Springfield, and recalled what had been said on many occasions by the Minister of Finance about the fruits of the policy of high surpluses, even if not budgeted for, and debt retirement. But when we come to examine the public debt charges at page 17 we find that the charges being provided for this year actually show an increase over last year. Last year the total was $423,710,000 and this year they have risen to $427,363,000. I am quite sure that the increase in the interest rate on government borrowings, which has been evident in the past six months, is not reflected as yet in these estimates and there must be some further explanation for the increase.


Douglas Charles Abbott: The increase in the general administrative item, as in the earlier items, is due entirely to increased salaries. In the case of the general administration vote we have 51 positions less than last year. Notwithstanding that reduction in staff, our payroll will be $50,000 higher. In the case of the comptroller, which of course is a very large establishment, we have 275 positions less than last year, or 3,897 positions as against 4,172. The increase in that branch is almost entirely due to general salary revisions together with the increased cost of office supplies and equipment, new cheque writing equipment and additional mailing charges in respect to larger volume of family allowances cheques.
In the case of charges for interest on the public debt, the increase there is due entirely to involuntary borrowings. By involuntary borrowings I mean payments made into our pension fund, and into the annuities account. When we sell annuities we have to pay three per cent, or credit three per cent interest to the account. Then there is also the interest on Canada savings bonds. The increase in that item is due entirely to this form of involuntary borrowing.


Donald Methuen Fleming: Even taking into account these forms of involuntary borrowings, we
EMr. Fleming.]	[DOT]
must remember that the debt was lower at the end of 1950 than it was at the beginning.


Douglas Charles Abbott: This does not show as part of the funded debt.


Donald Methuen Fleming: Even taking account of the surplus that the minister has mentioned and which we were given to understand went entirely for debt reduction-


Douglas Charles Abbott: Net debt reduction.


Donald Methuen Fleming: I think most members of the house understood that it was in fact a net debt reduction. Are we to understand that because of these involuntary borrowings there was no net debt reduction?


Douglas Charles Abbott: I know my hon. friend appreciates the difference between gross and net debt. While on the one side of the balance sheet, in the case of these pension funds, and so on, we have an obligation which is part of our gross debt; in the net debt we take credit for the asset which is the amount in the fund.


Victor Quelch: I should like to refer to the FAO for a moment and I know it may be said that this is part of the Department of Agriculture or the Department of External Affairs. The matter I wish to deal with has to do with the financing of exports of commodities. Two days ago I quoted from the report of the director general of FAO for 1949-50 where he referred to the fact that there is far too little food for the world's hungry mouths and that an increase in production would not be enough to keep pace with the number of human beings. Then he went on to say that more and more people realized that such conditions were no longer necessary.
I think the food and agriculture organization has done some fine work in the past but unfortunately much of that work has been nullified by the member nations turning down its recommendations. That same report refers to the fact that two or three proposals were made to deal with the distribution of surplus food to the hungry people of the world, and I quote from page 13 of the report as follows:
The first proposal for a world food board which would buy supplies during periods of surplus and release them during periods of scarcity, was turned down by governments.
The next proposal of the FAO was for an international commodity clearing house, with much narrowed functions.


Douglas Charles Abbott: Item 96 deals with the food and agriculture organization of the United Nations. I am afraid I am not prepared to discuss this matter under my estimates.


Victor Quelch: I am simply giving a background for the question I am going to ask

which I think comes directly within the minister's sphere. As I mentioned, the international commodity clearing house was turned down. Here is an interesting point. Canada's delegate to the food and agriculture conference, the Minister of Agriculture, took the stand that there was nothing in the international commodity clearing house that could not be done individually by a nation. That was one argument he presented for turning down that proposal.
We may soon face a situation where we have surpluses of food in Canada and there will be certain countries in the world where people are starving but where they will be unable to finance imports of our food. The Minister of Agriculture said that there was nothing in the idea of an international commodity clearing house that we could not do by ourselves. The conditions out west never looked better. I do not want to be too optimistic because as a farmer I know how conditions can change, but there is more moisture this year than we have had for many years.
If we have large crops with resultant surpluses, if we are faced with the fact that people are starving in a country like India and India is unable to pay for our surplus food, will the minister give us the assurance that his department will provide the means by which exports of food to needy countries can be financed? I have great confidence in the Minister of Trade and Commerce, but after all his job is to trade our food for the products of other countries. If a country has no commodities to trade with us the Minister of Trade and Commerce will not be able to trade with them.
The responsibility will then lie with the Minister of Finance to find ways and means of getting the surplus food of this country to the nations that need it. Mind you, our delegate turned down the recommendation for an international commodity clearing house which would have provided the means by which that surplus food could have been delivered to needy people.


Douglas Charles Abbott: I am afraid that I am not familiar with the proceedings of FAO and what methods are adopted to finance foreign trade at some future time. I do not think it would be appropriate for me to give an assurance now as to what we would do. That would be a matter of policy that would have to be decided at that time. We were discussing export credits a little earlier, and by means of loans to the United Kingdom and other countries we have assured a fairly steady market for our export products. I would not attempt this evening to forecast
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what the policy of the government would be under some future set of conditions.


Victor Quelch: If in the future we have a surplus of food and if there are people in any part of the world needing that food, all I want the minister to do is to assure us that his department will see that ways and means are found by which that food can be got to those hungry people. In other words, we want assurance from the minister that his department will not allow food to rot while there are hungry people in any part of the world needing that food. I am not asking the minister to declare what his policy will be; I am just asking for that assurance.


Douglas Charles Abbott: In the ten or eleven years I have been a member of this house there has been no case in which food has rotted because we have been unable to find a means of disposing of it to people who needed it, and I hope I will not have that experience during such time as I remain here.


Victor Quelch: That may be true about Canada, but food has been allowed to rot in the United States. They had a great many surpluses which were stored; eggs, for example, were kept for so long that they rotted, and today they are giving food away.


Douglas Charles Abbott: I have enough troubles of my own without looking after any in the United States.


Mr. Browne (St. John's West):: Just as a point of interest I may tell the minister that fish was dumped in Newfoundland last year.


Percy Ellis Wright: Under what item does the Canadian farm loan board come?


Douglas Charles Abbott: I am told there is no item covering it. That is a separate corporation, as my hon. friend knows, and there is no vote for it. If my hon. friend wanted some information I would be glad to have him ask for it now on the general item.


Percy Ellis Wright: It is not exactly information; I want to make a suggestion to the minister. The Canadian Farm Loan Board Act was passed in 1929, and under it loans were made on farm lands of up to 50 per cent of the appraised value of the land. The total amount of the loan that could be made to any one borrower was $5,000. In 1934 the act was amended to permit a second mortgage loan of up to $2,000. Since that time there has been no change in the amount that can be loaned, and today we find that these amounts are not large enough. The value of land, of machinery and of everything the farmer has to buy today has doubled or tripled since 1929, and many young farmers find it

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impossible to obtain an economic farm unit with the amount of money that can be borrowed under this act.
Until 1945 these loans carried interest at the rate of 5 per cent on first mortgages and 5J per cent on second mortgages. At that time the interest rate was reduced to 4J per cent on first mortgages and 5 per cent on second mortgages. The difficulty today, as I am sure the minister will realize, is that the amount that can be borrowed is really too small to obtain enough land. The cost of land is greater, and all the expenses that go into the establishment of an economic unit for farming are easily twice today what they were when this act came into force. If this legislation is to do the job it should do I believe the maximum amount that may be borrowed must be increased.
There is a demand for these loans. The 1950 report states that the board carried forward 565 loan applications not disposed of during the previous fiscal year, and received a further 4,639 applications. It states further that the loans granted amounted to $5,189,400 as compared with $4,919,300 the previous year. So there is a demand for this type of loan. The purpose would be served much better, I believe, if the minister could see his way clear to have the amount of the loan that can be made to one applicant increased to at least $10,000 instead of $5,000, because today $10,000 will not do any more than $5,000 did when the act was passed in 1929. I just want to bring this to the attention of the minister and ask him to consider it-


Douglas Charles Abbott: I will be glad to do that.


Percy Ellis Wright: -and see if something cannot be done to increase the amount of these loans.


Douglas Charles Abbott: I will be glad to take these representations into consideration.


John Horne Blackmore: I would like to ask the minister one or two questions before the item carries. I gathered when the minister replied to the hon. member for Peace River that he intimated, if he did not state, that one of the functions of the Bank of Canada was to guarantee the integrity of the Canadian currency. Is that correct?


Douglas Charles Abbott: I do not know that I put it in just those terms. I do not remember exactly what I said, but what I intended to say was that one of its functions was to see to the management of the Canadian currency, that it should be issued in proper form, not to excess, and so on.


John Horne Blackmore: I would like to know whether the minister would agree that the

expression "integrity of the Canadian currency" would be accurate. Would he accept that as being an expression of the concept that is in his mind?


Douglas Charles Abbott: I do not know whether or not I used that term. I think perhaps that word might be just a little too strong. There is a limit to what the bank can do. I gave a fairly carefully worded offhand explanation and pointed out that whatever the bank might do or whatever it felt it might do could be negatived by government policy, and that therefore in all these matters the ultimate responsibility would have to fall on the government. I really do not think I can elaborate on that very much tonight.


John Horne Blackmore: I would like very much to have the minister tie himself down to a definition.


Douglas Charles Abbott: He never ties himself down.


John Horne Blackmore: I am quite sure of that. He dashes along very cavalierly and never commits himself to anything. Now let him commit himself. Would he accept the expression "the integrity of the Canadian currency"? A moment ago he said that currency would not be issued to excess. What does he mean by that? I want something we can get our teeth into.


Douglas Charles Abbott: I am sorry; would the hon. member repeat his question. I was checking on something with my experts.


John Horne Blackmore: I would like the minister to check with his experts, the very best he has, because he will need them. I want to know whether the expression "integrity of the Canadian currency" would be the one the minister would choose rather than "soundness of the currency".


Douglas Charles Abbott: I would prefer "integrity".


John Horne Blackmore: So do I. Then would you just tell us what you mean by integrity.


Douglas Charles Abbott: I have not the Oxford dictionary here, but I would be prepared to accept the definition it contains.


John Horne Blackmore: The minister has his
experts there; they must have an Oxford dictionary. How would his experts define the integrity of the Canadian currency?


Douglas Charles Abbott: I do not know that that is their responsibility. I will have to assume responsibility for what is meant by that.


John Horne Blackmore: Then let the minister take the responsibility right now and tell us the meaning of that phrase as applied to Canadian currency.


Joseph-Alfred Dion: Shall the item carry?


John Horne Blackmore: No, Mr. Chairman, and it is not likely to be carried tor quite a while. We want something we can get our teeth into. One of the biggest troubles when many people talk about money is that they are just not careful about the words they use. If we can get some words we can actually rely upon we can use them as a base from which to begin. Would the expression "integrity of currency" be one that could be substituted for "soundness of currency"? In the days of R. B. Bennett we had a tremendous amount of talk about sound money, and Mr. Dunning carried on the expression, sound money. What does sound money really mean?


Joseph-Alfred Dion: Shall the item carry?


John Horne Blackmore: No. I would like the minister to answer that.


Douglas Charles Abbott: As Mr. Bennett would have said, I think sound money means sound money.


John Horne Blackmore: I wonder if the minister could not improve upon that definition.


Douglas Charles Abbott: I doubt it. I do not believe I could.


John Horne Blackmore: Then would the minister say a sound dollar is one that retains a constant purchasing power for a given length of time, so that a dollar in 1949 would buy practically the same amount of wheat or any other commodity as a dollar in 1939? Would that be a definition of "sound" that we could accept?


Douglas Charles Abbott: Certainly that would be the counsel of perfection; it would be a splendid thing if money retained a constant purchasing power, but in this imperfect world unfortunately it does not.


John Horne Blackmore: We could more appropriately say under this exceedingly imperfect financial system under which we work it is almost impossible to obtain. The minister evidently agrees that a sound dollar is a dollar that retains its purchasing power at about the same level over a period of years. I believe the minister will grant that since 1939 the Canadian dollar has been exceedingly unsound.


Douglas Charles Abbott: I would not say that.


John Horne Blackmore: You would not say that?


Douglas Charles Abbott: Oh, no.


John Horne Blackmore: Let us examine that
matter for a moment or two. The soundness of a dollar is to be determined by the price of goods, is it not? If the price of goods doubles, the value of the dollar is halved. In other words, a dollar is by no means sound which does not maintain its purchasing power. Now, the price of goods in Canada
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has not quite doubled in these ten years but it has come very close to it. The Canadian dollar failed completely to remain sound. Would the minister challenge that statement?


Douglas Charles Abbott: All I can say, Mr. Chairman, is that I have listened with great interest to my hon. friend's views for eleven years, and he has been listening for about the same length of time to mine. I do not believe either of us has been able to convince the other.


John Horne Blackmore: That is quite right, but
there is still time. We are still young. I should like to read into the record what has happened in respect to prices according to the figures I have here which appear in a publication of the government of Canada. It is entitled "Prices and Price Indexes", February, 1951, published by the dominion bureau of statistics, covering wholesale prices, cost of living, security prices and exchange rates. I am reading from page 14, the second column:
Total
increase
since
Date	August, 1939
1939 Aug.	1	
100-81941 Oct.	1	
115-11945	Dec.	1	
120-11946	Dec.	2	
127-11949	Mar.	1	
159-2April 1	
159-3May 2	
159-5June 1	
160-5July 2	
162-1Aug. 1	
162-8Sept. 1	
162-3Oct. 1	
162-2Nov. 1	
161-7Dec. 1	
161-51950	Jan.	3	
161-0Feb. 1	
161-6Mar. 1	
163-7Apr. 1	
164-0May 1	
164-0June 1	
165-4July 3	
167-5Aug. 1	
163-5Sept. 1	
169-8Oct. 2	
170-7Nov. 1	
170-7Dec. 1	
171-11951	Jan. 2	
172-5Feb. 1	
175-2
Price index advances since the publication of this document are:
Mar. 1	 179-7
Apr. 1	 181-8
I do not believe the minister would care to say that the Canadian dollar remained sound during that period. Its value has been steadily falling. The minister will say, "Well, that is the result of inflation." Will the minister tell us exactly what inflation is, the way he uses the word?


Douglas Charles Abbott: I do not know that at this late hour of the evening I should attempt to embark

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on that subject. I shall use the short definition, although it is an oversimplification. It is a case of too many dollars chasing too few goods.


John Horne Blackmore: The minister says it is too many dollars chasing too few goods. Let us examine this thing with a little care. In April of 1946 the price of steel advanced $5 a ton in Canada, I presume as a result of a request of the three steel companies and with the consent of the Canadian government. Will the minister show how the amount of money then in circulation had anything to do with that increase in the price of steel?


Douglas Charles Abbott: It is not my department, Mr. Chairman.


John Horne Blackmore: It is very vital to the question under discussion. According to the minister's definition that increase in the price of steel ought to have been the result of a surplus of money in circulation. It was nothing of the kind. That advance of $5 in 1946 was manipulated apparently or demanded by the steel companies and permitted by the government. The money in circulation had nothing to do with it at all.
During the year 1946 the steel workers struck. As a result of that long strike of about eighty-two days they obtained an advance in wages. The advance in wages increased the cost of the production of steel and everything else all over the country, because the people all over the country began demanding comparable increases in wages. Those increases in wages forced up the cost of production and forced up the prices of commodities. Will the minister show how the money in circulation had anything to do with those advances in prices? Will he show how too many dollars chasing too few goods had anything to do with that increase in price?


Douglas Charles Abbott: I thought everyone knew that there was not enough steel.


John Horne Blackmore: 
Douglas Charles Abbott: Mr. Chairman, I know that my hon. friend does not want to delay unduly the passage of these estimates. I hope that he will not feel that he should engage in a long discussion as to freight rates at this hour in the evening and at this stage in the
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session. We have had quite an extended discussion on inflation and its causes, both on the budget and at other times. I would appeal for his co-operation and for the co-operation of other members of the committee, in seeing that we try to stick as closely as we can to the item under discussion. We have had well over an hour of discussion now under the item of departmental administration. I am not attempting to curtail that discussion, but I would hope that we might try to keep it as closely as possible to the item that is before us.


John Horne Blackmore: I sympathize deeply with the minister, because the minister is in the awkward and untenable position of attempting to defend an utterly indefensible financial system. That is just exactly where his trouble lies. It is not his fault. It is the fault of the financial system under which he is attempting to act. As to delaying the estimates, I will tell you what I will do. I have been waiting for a long time to get a talk with the minister, and the opportunity has finally come. I am sure he has also been waiting a long time to get a talk with me. The opportunity has now come. I am right here, and I am going to stay right here so he can get at me.


Douglas Charles Abbott: I would not want to get at my hon. friend. I think too highly of him for that.


John Horne Blackmore: I will agree with the minister to allow his other items to go through, if he will hold this one and let it stand so that we may finish up this discussion in a workmanlike fashion some time a little bit later on. I would be quite willing to do that, or I will continue now what we are at present discussing, namely this item of inflation.


Douglas Charles Abbott: No, we are discussing an item of $1,500,000 for departmental administration.


John Horne Blackmore: Oh, yes; but under departmental administration is included everything pertaining to the minister's department. Certainly one of the minister's responsibilities has to do with the price structure, the control of inflation, the maintenance of the "integrity" of the Canadian dollar or the "soundness" of the Canadian dollar, or any other less objectionable or more accurate word the minister can find.


Ernest George Hansell: Out of this amount the minister pays his advisers for bad advice.


Douglas Charles Abbott: My hon. friend is within his rights. I appeal to him, however. As I say, we have discussed this question for eleven years now. But in those eleven or almost

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eleven years I have never succeeded in completely convincing my hon. friend; and he has never succeeded in convincing me that the financial system is wrong. He may be able to do it tonight, but I would doubt it.


John Horne Blackmore: What I am trying to do tonight is to find out whether the minister can laugh off or explain away irrefutable facts; and what I am giving him now are irrefutable facts pertaining to the so-called "inflation", the rise in prices. The matter is fundamental and it is exceedingly serious because as long as we go forward cavalierly, in the face of facts, saying that this increase in prices is a result of too many dollars chasing too few goods, we shall in the next few years make the most ghastly economic blunders that it is conceivable for a government to make. But if we face the fact that this increase in prices is not a result of a scarcity of goods but is a result of deliberate manipulation upwards, of deliberate profiteering; and if we grant that, then we shall adopt an entirely different method of dealing with the matter of high prices.
As I said a moment ago, Mr. Chairman, I have no desire to hold up these estimates. I have a happy home to go to and a lovely province to live in. I should like to get back there. But I also have a job to do here, and it is vital to the interests and the welfare of Canada, that I do my job so far as I can see. If the minister feels that he would rather have all this out on item one, we will have it out on item one; because I think I am strong enough- -to last until eleven o'clock.


Douglas Charles Abbott: I am sure of that.


John Horne Blackmore: I should like to- go on one step further. I could give a number of other details- that I have here a-s to the increase in the cost of clothing which occurred this very year. I have letters right here from Lethbridge people about the advances that were made by the wholesale companies to the retail companies. No mention is made of too many dollars chasing too few goods. In every single letter the company concerned says: Our costs have increased until we cannot stand, it any more and we have raised the price. Then we have the absolute hypocrisy -and that is the only word you can use-of the Department of Finance, the bank managers and all the financial people of that kind all over this country, in trying to delude the people of Canada into believing that the present increase in price is and has been the result of too many dollars chasing too few goods! That is one of the most consummate falsehoods ever perpetrated on a people.
Let us face facts just exactly as they are. Let us take the last rise in prices, namely,

the one in wood pulp. Can anyone possibly show how that increase in the price of wood pulp for paper was the result of too many dollars chasing too few rolls of paper? Well, what utter nonsense! The Minister of Trade and Commerce stood up in his place the other day and explained the increase in that price. I thought he made out a pretty good case. He went on to show that the costs of these pulp companies had increased so much that, although they had heroically absorbed a number of these costs, the time had come when they simply had to have an increase in the price of their wood pulp and paper. I imagine that every hon. member in the committee tonight heard him do that and will testify to what I say. That is the last one I have.
What is going to be the result of this increase in the paper price? It is going to cause an increase in costs all across the board. All we need is just two or three more increases like that in major -commodities in Canada and we shall have an irresistible demand on the part of labour for an increase in wages, just as we had an irresistible demand last year for an increase in wages on the railroads. We realized it was irresistible and we yielded. Can anyone say that the cause of the increase in railroad freight rates is the fact that we have too many dollars chasing too few railroad cars, or too few engines? What utter nonsense!
The minister has left the committee.


An hon. Member:: He could not take it.


John Horne Blackmore: He could not take the
facts. To me a fact is simply this-


James Sinclair: The minister has been sitting here seven hours today and I think he is entitled to go out and stretch his legs.


John Horne Blackmore: I am glad the parliamentary assistant said that. I myself have been here seven hours today. I realize the minister has the right to go out and stretch his legs. It is well to be known that he is not here, while these important questions are being asked.


James Sinclair: The hon. member could go
out and in during the seven hours, but the minister has been piloting bills and his estimates throughout the entire sittings of this house this morning and afternoon and evening. I think it is most unfair to suggest that the minister went out simply because he was upset by the remarks of the hon. member. He has been listening most intently all through to the comments of the hon. member.


Ernest George Hansell: While the minister is out
stretching his legs, Mr. Chairman, perhaps the assistant to the minister would not mind answering a question or two. Since his advisers are sitting in front of him it is quite likely that he can answer the questions just as effectively as the minister himself. I should like to ask this question. Assume that the minister is right in his answer-I am not saying he is, because the hon. member for Lethbridge says he is not-that there are too many dollars chasing too few goods. Does the minister absolve himself from all responsibility for the expansion of credit that has taken place throughout the last number of years? For instance, toward the end of the war there was a loan floated by the government. Bond salesmen were out to raise this loan. Of course it was raised. They tagged the office girl; they tagged the man in the factory; and they said, you can even buy bonds on the instalment plan. What happened? The minister floated that loan. He permitted people who wanted to buy bonds to go to the bank and borrow money to buy those bonds. The banks encouraged them to buy through them, and when the bond purchaser went to the bank to borrow the money for bonds, new money was issued. The minister knows that. If new money was issued, then new money was put into circulation, when goods should have been coming off the assembly line, if there was a deficiency of goods.
That was his plan; that was the government's financial policy, and I wish hon. members would recognize this. I notice that when questions are asked sometimes and there is persistence used in attempting to extract an answer from the minister, there is some levity in some quarters. The minister himself rises and says: "Well, the hon. member for Lethbridge and I have been talking about this for the last eleven years, and we do not understand each other." That does not answer the question.


Douglas Charles Abbott: That	was not what I said.
I said, neither of us had been able to convince the other.


Ernest George Hansell: I see. Well, I did not
scrutinize the answer so carefully but that does not change my point. Simply because they are not able to understand each other does not answer the question. I am asking a definite question on the basis that the minister believes at least that his answer was right in respect to too many dollars chasing too few goods. Does he absolve himself in that?
What I was going to say to hon. members is this. A certain levity exists because hon.
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members take the present financial system for granted, and assume that there is nothing wrong with it; that the government only errs in too much taxation or too little taxation, or taxing here instead of taxing there. But that is not the thing that is basically or particularly wrong. That is the boil that breaks out on the back of the neck. It wouldn't matter if it broke out somewhere else. If the blood is wrong in the system then you cannot cure the boils. The fact of the matter is that there are certain basic and fundamental things that are wrong with the financial system followed by the government. One thing that is wrong is-hon. members do not recognize this. I am certain that the evidence is there and the minister knows it. When the minister goes to the bank to borrow freshly created money which is lent at an interest, that freshly created money cannot be paid back without interest being created too. That is only a remark in passing.
Hon. members assume there is nothing wrong. Hon. members assume that when banks lend money they lend their depositors' money. They do not. The minister knows that they lend freshly created money which they themselves create with a stroke of a pen in their books. The minister knows that.
I am asking him whether he absolves himself from all responsibility when he knew that goods were in short supply? He himself admits that he encouraged the expansion of money in this country. You have to fix the blame somewhere. It is all right to say: Well, there is too much money chasing too few goods. Who is responsible for too much money? It does not drop down from heaven; it does not grow on trees. Somebody gave instructions to expand the credit of the country just as the minister gives instructions to restrict credit expansion. They cannot tell us there is too much money chasing automobiles. For the last day or two we have read in the newspapers that some of the factories are going to close down because there are too many cars.
I would like to focus the blame. Who is responsible? Does the minister absolve himself from all responsibility in not being able to manage the financial affairs of the country and to restrict credit at the proper time?


Douglas Charles Abbott: I am a modest man and never try to absolve myself from responsibility. I am prepared to take my share of responsibility for such things as I, as Minister of Finance, have done in matters of financial policy during the five years I have been Minister of Finance. But I like to believe it

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has -been pretty sound financial policy, and I am quite prepared to stand on the record of it.


Ernest George Hansell: We will have to accept the minister's answer, but I certainly expected cne with a little more strength to it than that.


Douglas Charles Abbott: It is a little late in the
evening.


Ernest George Hansell: Is it a sound financial policy when people with money in the bank ten years ago find that today that money is worth only half what it was worth then? If the minister will call that a satisfactory policy, then I will eat my hat, right here in the middle of the chamber of the House of Commons.


John Horne Blackmore: Now that the hon. member for Macleod has joined me in the argument, and I appreciate very much that he has, I should like to focus attention of the committee on the two points I was making.
The first of these was the point on which the hon. member for Macleod closed his speech, namely that the Canadian dollar has not been kept sound.


Solon Earl Low: Nor wholesome.


John Horne Blackmore: And if the Canadian
dollar has not been kept sound we certainly cannot say that the Canadian financial system, which is based upon that dollar, has been kept sound.


John Lambert Gibson: Fixed assets have doubled,
though.


John Horne Blackmore: Probably; but that is not money.


Donald Buchanan Blue: There are four times as many
dollars.


John Horne Blackmore: But the dollars are worth only about half. Let us keep our eye on the ball-and the ball in this case is the dollar. I maintain that the government has not a policy whereby it can keep the dollar sound. In the depression the dollar was appreciated until it was worth about twice what it was worth in 1927, so that people who contracted debts in 1927 had to pay the full amount of the debts plus interest in dollars that were twice as hard to get as in 1927. This brought about an almost inconceivable destruction of wealth and well-being in the country.
Then, a few years after that, the value of the dollar went down, so that those who had saved a little money have had it stolen from them in the last five years.


Solon Earl Low: The same system both times.


John Horne Blackmore: The next question was
one of inflation, and I wish to concentrate on it again. The hon. member for Macleod

said he was not assuming that there are too many dollars chasing too few goods. I am not, either. When we closed the war in 1946, let it be borne in mind that our productive capacity was geared to the conduct of a war. We had 1,250,000 of our finest producers in the war. Some 750,000 of them were overseas fighting, and the rest of them were in war plants. All those people came out of the war and entered the productive forces of the country.
Are we to be told that, with all that additional productive capacity to be applied to the production of consumer goods, we could not produce enough goods? What nonsense! If we could produce enough goods in 1946 for the demands of this country, then there must be something radically wrong with our financial and economic system if we cannot produce enough now. The men came back from war. We stopped producing munitions of war. No longer did we operate in the activities of war, but rather concentrated on our domestic economy. In the name of common sense, if we did not produce enough to keep up with the dollars seeking goods, then whose fault was it, and how in the world did it come about?


Donald Buchanan Blue: Working twelve hours a day,
seventy-two hours a week.


John Horne Blackmore: We were working plenty
of hours in 1946 to produce all the goods we needed in Canada. And just in a little while I will show plenty of evidence of a surplus of goods.
Only the other day we had the Minister of Trade and Commerce making a very positive statement. Perhaps I should read it.


James Sinclair: Dispense.


John Horne Blackmore: No; we do not like to be told these things! But I am telling you that we are getting at the facts and we are getting some truths, and from someone who knows. That is a sufficient answer-and he is telling someone who apparently does not know. Maybe that is a sufficient answer.
I am quoting from good authorities recognized in this country. In this connection I would refer to the speech of the Minister of Trade and Commerce on June 14, where he says:
There is another important element in the defence production program, and that is manpower. We have a tight manpower situation. As civilian producers, with exceptionally heavy stocks, run into consumer resistance, they may find it necessary to cut back staff.
Did the Minister of Trade and Commerce know what he was talking about when he spoke about exceptionally heavy stocks in the hands of civilian producers, or did he not?


Donald Buchanan Blue: No one in Canada did.


John Horne Blackmore: I am assuming the minister did know. He goes on to say:
I am satisfied, however, that such personnel will be absorbed quickly into defence or defencesupporting industries. There will be minor dislocations, but I am satisfied that there is sufficient labour of the right kind in Canada to support our defence program as well as a flourishing civilian economy.
What does "flourishing civilian economy" mean? Is that one in which there are not enough shoes being produced, enough stockings, enough bread and butter, enough fish, or one in which all those things and other goods are being produced in abundance? It can only mean that we are producing in abundance, and that we have already in store an abundance.
The only reason that that abundance has not been manifested in the market is that the people processing it are fearful they will break the market and bring down the price of these goods to a ruinous level. That is all. They are deliberately holding their goods of! the market.
I should like now to turn to one other aspect of this whole matter of the responsibilities of the Department of Finance. I am sorry the minister is not in his seat, but I am glad he has the opportunity to go out to stretch his legs. However, the parliamentary assistant is a very promising young man, and his answers ought to be just as acceptable as those of the minister.
It is recognized I believe that if you are going to have your dollar completely sound, you must have enough dollars in your economy and they must be circulated in the right places. You must not have too many, and you must have enough.


Donald Buchanan Blue: When did the average Canadian people have more?


John Horne Blackmore: I do not believe they have had more. I agree with the hon. member.


Solon Earl Low: You have made another convert.


John Horne Blackmore: He is simply a man who faces facts. He has not been carried down the primrose path by the minister, that is all. We have much more money in circulation now than we had in 1939 or 1945, yet we have not more than enough to consume the goods which are in store if the goods were made available.


Donald Buchanan Blue: You have plenty, haven't you?


John Horne Blackmore: We have plenty, that is all right. I am quite interested in the hon. member's questions. I do not want to repress any question just as long as it is honest. This is a most important matter. A few minutes
Supply-Finance
ago the hon. member for Peace River asked the minister if the Bank of Canada had any mechanism whereby it could increase the number of dollars in circulation if it should be found that there were too few dollars chasing too many goods, which was exactly the thing that happened in the depression.
Just as soon as you have too few dollars chasing too many goods you have a fall in price, there is an increase in unemployment and you have a depression. Up to the present time under the present financial system the only means that mankind has discovered to get a nation out of a depression is to go to war. That is the only means that has been used up to the present time to get people out of depressions.


Some hon. Members:: Oh, oh.


Solon Earl Low: Name a time when they did not.


John Horne Blackmore: There was 1914. We do not want to go too far on that. I repeat that the only way you can get people out of a depression is to increase the money in circulation as you increase it through war. If the minister had been here I wanted to ask him a question. I do not know whether I win ask the parliamentary assistant, or whether I will just answer the question. Suppose that the Bank of Canada was being managed by the two gentlemen who now sit in front of the parliamentary assistant and who I think are pretty high in the confidence of the Bank of Canada. Suppose that we found in Canada that there were too many shoes, too many clothes of all kinds and too many hats. Would they advise the chartered banks to lend money to anybody who wanted to produce more shoes or more clothing or more hats? Would they? Not by any manner of means.
That was exactly the trouble in 1931, 1932 and 1933. All hon. members of this house can remember how in those days it was said that we had overproduction. The result was that no bank in the country dared lend to produce anything because there was already in the economy of Canada more of everything than could be bought by the people. Will the experts who sit in front of the parliamentary assistant tell us how in the world the Bank of Canada by means of an "expansionist" policy could cause the banks to lend money and get it into circulation when they dared not lend money because of overproduction? There will be no answer because the Bank of Canada has no answer. The Minister of Finance has no answer.
The present financial system has no answer. The question is just not answerable under the present system.
Suppose the Bank of Canada, realizing that say one billion dollars more of purchasing

Supply-Finance
power had to go out into circulation in order to have enough dollars chasing the goods there were, how would the Bank of Canada proceed to get those dollars out into circulation?


Solon Earl Low: That was the question I asked the minister.


John Horne Blackmore: That is what the hon. member for Peace River asked.


An hon. Member:: Carried.


John Horne Blackmore: I know you would like to have it carried because the pressure is getting worse all the time. You are getting into difficulties deeper and deeper. Of course you would like to have it carried, but it is not going to carry until some of these questions are answered. Last December the best informed producers in Canada were worrying for fear there would be a depression. What we want to understand is what will be done if a depression comes on? A depression will come on just as soon as you have more goods in circulation than you have dollars to chase them.


Donald Buchanan Blue: Who will be the judge?


John Horne Blackmore: I should like to quote from a press dispatch which has an important bearing on this matter. The Lethbridge Herald contained a Canadian Press report of December 4 from Montreal headed, "Sees recession soon unless war grows worse." This reads:
Alexander Gray, Sr., Toronto industrialist, Friday night predicted "a definite recession within twelve months if the war situation . . . does not grow worse."
There are a lot of people who are almost afraid we are going to have peace in Korea, that we are not going to be able to use all these war munitions.


Donald Buchanan Blue: I hope you are right for once.


John Horne Blackmore: There are a lot of people who are wishing that down underneath because they realize that if we do not go to war we are going to be plunged into a depression and under the present financial system they would not know what to do.


Donald Buchanan Blue: Who are those people?


John Horne Blackmore: The article continues:
Mr. Gray, president of Gray-Bonney Tool Company Limited, and a director of the Canadian Exporters' Association, addressing the Society of Automotive Engineers, added:
"This boom is built on uncertainty, on fear of the unknown, on credit. When you read of what our government is going to do, and what the United States government is going to do, it changes from week to week, from month, to month. News of probable defence orders is announced months before actual orders are placed.
When you talk to business executives they throw up their hands. Their plants are running to capacity."

I do not think I need go on any longer with that particular article because that is sufficient to establish my point. Let us suppose that we increase our productive capacity in Canada fast enough to supply all the needs of the men overseas and more goods than all Canadians need. Can the Bank of Canada suggest a single means whereby adequate money could be put into circulation? No, it cannot. That is what raises the whole question of the Social Credit contention concerning debt-free money. I would like to ask the parliamentary assistant a question, but first let me say what happened. As most hon. members know, in 1916-17, during the war, under the Finance Act of 1914 the dominion government issued and spent into circulation $26 million. It was debt free. No bank printed it; the treasury did, and the government spent it. Would the parliamentary assistant say one of those twenty-six million dollars was a sound dollar?


John Lambert Gibson: It contaminated all the rest of the dollars.


Some hon. Members:: Carried.


John Horne Blackmore: Of course the parliamentary assistant dare not give the answer. The answer would have to be that it was. A sound dollar is a dollar that has stable purchasing power. In other words it has enough goods at stable prices behind it for it to chase and not too many. This $26 million was issued and spent by the government of the time. Will anyone dare say-I know the parliamentary assistant will not-that one of those dollars was unsound? It would have exactly the same purchasing power as the dollars already in circulation, dollars that had been loaned there. Very well. The soundness of a dollar depends upon the goods and services available for it to chase and upon the price structure. There is no answer to that; that must be a sound dollar. In other words the soundness of a dollar must depend upon the amount of goods in the community and the price structure. If the debt free dollar spent into circulation does not cause prices to increase, then that dollar is just as sound as though it had been loaned by a bank. There can be no other conclusion. The minister has come in now; I would ask him that question.


Douglas Charles Abbott: I am going to say to my hon. friend that I think it is an imposition upon the members of the committee that one member should take up the time he has taken today in constant repetition. He made a forty minute speech this morning on gold which was out of order on the housing bill. Since nine o'clock this evening he has been

talking almost incessantly, and I think it is an imposition upon the other members of the committee.


Some hon. Members:: Hear, hear.


Solon Earl Low: May I just say to the minister in reply that if he and his parliamentary assistant would show some disposition to answer the questions which have been asked probably we would be through in half the time.


John Horne Blackmore: Or some ability to do so.


Solon Earl Low: It is coming [DOT] to a pretty pass when an hon. member has to work as hard as the hon. member for Lethbridge has worked to try to get answers.


Douglas Charles Abbott: He has had his question
answered a dozen times, and I do not intend to answer it again this evening.


Solon Earl Low: The discussion that has taken place has been absolutely fundamental to the financial policy of this country, which is before the committee in the first item of the minister's estimates. For months we have been trying to get him to face this situation. We have told him for the last three years that I know of that we were going to force him into a position some time where he would have to answer these questions, where he would have to defend his policy. It is no defence to just sit there and give a general brush-off, and drag red herrings across the trail; nor is it a defence to protest to you, Mr. Chairman, against a person taking time. What are we here for but to take time to get satisfactory answers to the questions the people of Canada want answered? I like my hon. friend; I have always admired him, but I have warned him time and again that this was coming and he should have been ready. He is not ready, as he said tonight; and it is high time he was ready.


Douglas Charles Abbott: I did not say any such thing. I answered questions for an hour, and I have answered about all I can answer this evening.


Solon Earl Low: The people of this country will be able to judge the style of those answers. They will be able to judge whether or not the minister has the information. When they look over the record of the debate this evening they will say the Minister of Finance did not know anything, he did not answer anything. From the answers that have been put on the record tonight the people of this country who read this debate will say the Minister of Finance did not answer a single question. He tried to brush us off. To begin with tonight I tried to get the minister to delve into these things and give us something like a reasonable answer. I told him we were looking forward to the time when a certain
Supply-Finance
resolution now on the order paper would be called, and I said at that time we hoped to launch a full-dress debate on the government's financial policy. But in order to get some information I thought I would like to have, I asked some questions. That was followed by questions from other members of the group.


Douglas Charles Abbott: Mostly by one member.


Solon Earl Low: I think the hon. member for Lethbridge tried valiantly to get answers to the questions. He was not given satisfaction in a single one, as the record will show. He is entitled to satisfactory answers to those questions, and so is the country. As far as I am concerned, since the minister is taking the position he is, I am not going to attempt to call off the dogs here at all. I say to my hon. friend, go to it, and if you want to keep going here until next Christmas go ahead. As far as I am concerned I would like the minister or someone from his department to give us satisfactory answers to these questions. Go into detail on them. The hon. member for Lethbridge started out on a very important line of questioning about inflation and the integrity of the dollar. If the people of this country, who are labouring under the highest costs in history, take a look at the kind of answers that have come from the government side, the only conclusion they can reach is that nobody here gives a damn whether or not they have to go on paying these high prices.


An hon. Member:: Watch your language.


Solon Earl Low: I think I have the right to punctuate my remarks a little; and inasmuch as "dam" means to stop, I guess I can use that word. I am taking this position with respect to the assertion made a moment ago by the minister. If he and his department will take a few minutes to get right down to the questions and give us sensible and suitable answers, their estimates will not be held up at all. That is all I am going to say.


John Horne Blackmore: I thank the minister most sincerely for putting on record indelibly a statement to the effect that I have done my best in the time at my disposal. I have worked very hard. It does not mean very much to people who have not enough sense to appreciate it, and there are plenty of such people. The important fact is that these questions simply have to be answered.


An hon. Member:: Who is the judge?


John Horne Blackmore: I am the judge. If you can
defend yourself get up and do so; don't yap like a lot of silly pups. Get up and say something.


Joseph-Alfred Dion: Order. I would ask the hon. member to address the Chair.
4408

Supply-Finance


John Horne Blackmore: Thank you, sir. Of course the chairman will understand that I was not addressing him when I spoke as I did a moment ago. I was asking this question. I asked the parliamentary assistant whether or not one of those $26 million that were created by the finance department of Canada in 1916 and 1917, and spent into circulation, was sound. It is a simple matter to answer that, if he knows how to answer it. If he says it was unsound he knows I shall ask him to prove it, and that he cannot do.


Mr. Dewar:: Why ask him then?


John Horne Blackmore: Just to show him up. That is what he is here for, is it not? Why do you ask questions of any government minister? To find out whether he knows his business. Is that not right? You ask questions to ascertain whether he knows his business, and that is exactly what I am doing here. We want to know whether or not he knows his business.


Donald Buchanan Blue: He knows his ibusiness.


John Horne Blackmore: He should be able to prove it then, and he has not done it thus far. He has not shown he knows anything about it. He does not know anything about sound money, and does not dare even try to define it. He does not know anything about this inflation. He would pretend it is the result of too many dollars chasing too few goods, but we have proved by point after point, what he cannot disprove, that it is a direct result of the profiteering which has forced up the cost of producing and thus of living.
I ask the minister whether one of these $26 million was sound. He knows it was sound. He does not dare say it was sound, however, because if he does he will get into trouble with St. James street and the press all over the country. He does not dare say it was sound, because the very minute he says it was sound he knows that I shall ask him why he does not create a few of suoh dollars now and put them into circulation.. He may say that it would cause inflation. I have already proven, what he cannot possibly disprove, that the so-called inflation is not inflation at all but is the result of the manipulation of prices upward and that there are plenty of goods. I am going to ask the minister once more-he says he has answered the question but he has not answered one of my questions in a straightforward manner -I am going to ask the minister to tell the committee, if he dare, whether or not one of those $26 million which were created and spent into circulation under the Finance Act of 1914 was sound. Such dollars could be created and spent now.
[The Chairman.]


Daniel Aloysius Riley: Would you mind repeating that?


Douglas Charles Abbott: At the time to which my hon. friend refers I was in France, but I think the dollars were probably sound.


John Horne Blackmore: I believe the dollars were sound, too. I believe those dollars were sound, and I believe similar dollars issued today and spent into circulation would be sound. I shall defy the minister and all his associates to prove that one of them would not be sound today.


Daniel Aloysius Riley: That is the way to talk.


John Horne Blackmore: I have issued that defiance several times, and I issue it right now in the presence of plenty of witnesses.


Douglas Charles Abbott: It sounds like the marriage ceremony.


Stanley Howard Knowles: There will be a divorce on Friday night.


John Horne Blackmore: This morning I spent some time of the house, and I apologize if I have offended any hon. members, showing that the Bradbury which was the war currency that Britain created through her treasury by means of a treasury bill was sound. It was a one pound note. I showed that 354 million of those one-pound notes were printed and circulated in Britain during world war I and up to 1920. I adduced evidence from William A. Shaw's book "Currency, Credit and the Exchanges", and his excellent book "The Theory and Principles of Central Banking" to show that those pound notes were sound.


Daniel Aloysius Riley: Go into that a little deeper.


John Horne Blackmore: Yes, I shall be glad to do that. They were sound. I do not believe the hon. member was here-


Daniel Aloysius Riley: I was here, but I did not quite understand it.


John Horne Blackmore: If the hon. member will take Hansard tomorrow and read the speech I made about the Bradbury's, then go to the library and get this book "Currency, Credit and the Exchanges" which tells about the Bradbury's; if he will get the book on "The Theory and Principles of Central Banking", which was written by the same man in 1930, read the quotations I gave and read the books, he will find beyond any shadow of doubt that William A. Shaw considered that money absolutely sound.


Daniel Aloysius Riley: Would you mind analysing it?


John Horne Blackmore: I shall gladly do that. I do not want to burden anyone, because I went to the trouble of analysing it this morning.


Daniel Aloysius Riley: I am interested.


John Horne Blackmore: I shall quote something
in addition that William A. Shaw said. Here is a quotation from page 66 of "Currency, Credit and the Exchanges":
The issue of currency is not the affair of a bank. It is the affair of the state, and now that we have established that principle, if we go back on it and sacrifice it we may go still further and sacrifice the automatic principle which is enshrined in the treasury note, and the discovery of which is the greatest achievement of modern economic practice.
Let me analyse that for a minute or two. The hon. member, who has asked me that question so conscientiously, realizes that in this nation today the state does not issue any of the money. The money is issued by the Bank of Canada, and the Bank of Canada, no matter whether or not the government owns it, is a bank. Consequently, the principle which William A. Shaw lays down is violated with the issuance of every dollar that is issued in the Dominion of Canada. Now, that is rather important, is it not? The $26 million in Canada and the treasury notes in Britain that were issued and spent during world war I were issued without any debt. The government did not borrow them; it created them and issued them just the same as the Bank of Canada could create and lend money or issue it.
Here is another quotation from page 67 of the same book.


Some hon. Members:: Eleven o'clock.


John Horne Blackmore: It reads:
This theory of money rests upon one basic principle-viz., that goods purchase goods. In this axiom the word "goods" is used for brevity's sake as comprehending all economic goods or services, which as possessing economic value, possess thereby exchange value.
Let me point this out, Mr. Chairman. As I have said time and again from April 19 onward when I started this campaign, the
Supply-Finance
basis of money ought to be goods. This statement about too many dollars chasing too few goods or too few dollars chasing too many goods indicates quite clearly that the real purchasing power in a community is goods and services. This author clearly lays down that principle.


Some hon. Members:: Eleven o'clock.
Item stands.
Progress reported.



BUSINESS OF THE HOUSE

Alphonse Fournier: Mr. Speaker, tomorrow we shall take up three resolutions, two in the name of the Minister of National Health and Welfare, one concerning old age assistance and the other concerning allowances for blind persons. In the past everyone favoured the principle of these resolutions, and I think we should have a short debate because the bills will come up on Saturday. Then, we shall take up the resolution in the name of the Prime Minister concerning the Federal District Commission Act, 1927. We shall then go into supply, and take up the estimates of national health and welfare, public works and the secretary of state. If the committee on veterans affairs complete their work by tomorrow and report the bills they have before them, on Friday we intend to take up the estimates of the Department of Veterans Affairs and all the bills relating to veterans.


Gordon Graydon: May I ask the Minister of Public Works (Mr. Fournier) whether the three resolutions which he named will be taken up in that order?


Alphonse Fournier: Yes.


[Stage Direction]
At eleven o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]

[Stage Direction]

Thursday, June 21, 1951